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Zillow Economist: Low Interest Could Pose Future Problems to Homebuyers

interest rates

Zillow Chief Economist Stan Humphries warned on Tuesday that the extremely low mortgage rates we’re seeing right now could pose a problem for would-be homebuyers once they’re ready to turn around and sell.

“In a lot of markets, homebuyers are looking at home prices through this artificially distorted lens of very low rates,” Humphries told CNBC, explaining that they’re willing to pay more because rates are so cheap.

Then, somewhere down the line when those same buyers are ready to sell, they could have a hard time getting the return they were expecting because the house did not appreciate much beyond their original purchase price.

“It’s important for us to get back to a bit more normal rate regime where homeowners are actually looking at the true price of housing … [without] looking at it through 3.5 percent mortgage rates,” Humphries said.

Image via flickr/Simon Cunningham

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