Rising interest rates typically have what effect on real estate demand and values?
Correct Answer
B) Decrease demand and decrease values
All else equal, rising mortgage rates raise borrowing costs and tend to reduce financed-buyer demand and put downward pressure on prices. Actual values can still rise if supply or other conditions change. The original explanation incorrectly declared that lower demand and higher values are logically impossible in every market.
Why This Is the Correct Answer
Holding other factors constant, higher rates reduce affordability and tend to weaken buyer demand and price support. This is a directional tendency, not a guarantee of falling values.
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