RealtyTrac's Peter Miller weighs in on how the real estate market, as currently constituted, could hit a big speed-bump once interest rates do finally begin to rise again.

So far this year, home values have risen and sales have increased, while interest rates have stayed below 4% (the average rate over the past 40 years has been 8.6%). The Federal Reserve Bank has consistently talked about raising interest rates, and while many in the real estate industry feel it would be a non-event, Miller wonders if we're understating the threat:

The principle here is always the same: Given a particular debt-to-income ratio any increase in defined costs such as student debt, auto financing, credit card bills, property insurance or property taxes reduces the dollars available for principal and interest.

Going further, a higher interest rate is simply a cost with the same impact; it limits the ability of the borrower to qualify for financing. 
Not only is this a problem for marginal borrowers, it’s also a problem for sellers because suddenly their pool of potential purchasers is smaller so they may have to lower their asking price.
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