After months of unprecedented home sales and price appreciation, Knoxville’s housing market is finally beginning to slow down.
What’s next for the real estate market? It’s uncertain, but history can provide us with insight about what to expect.
Amid concerns about rising consumer prices and runaway inflation, mortgage rates skyrocketed in the early 1980s, reaching a peak of more than 18% in October 1981.
Record high mortgage rates provoked a rapid decline in housing affordability and home sales fell dramatically as a result, dropping by almost 50% in the span of just two years. While home sales and house prices often rise and fall in tandem, the fear of a total housing market collapse never quite materialized. Home prices ultimately held on and price growth merely decelerated, never quite going into the negative.
Given that prices never declined after mortgage rates spiked in the 1980s, there isn’t much reason to suspect a precipitous fall in home…