HONOLULU (HawaiiNewsNow) - Everyone is wondering what will happen if mortgage rates continue to rise and many assume that it will have a large negative effect on home sales and prices. Here are some graphs that share a different story. Home price trends since 1987 compared to mortgage interest rates show that home prices in Hawaii have risen steadily with blips here and there. Mortgage interest rates have dropped steadily since 1987 with a few plateaus along the way.
It may sometimes look like there is a direct correlation between interest rates and prices between 2008-2016, but there are times when it seems there is no correlation (1997-2000, 1987-1992). Thus, it seems that there are other more significant factors at play like the strength of the economy, population, inventory of homes and employment.
Interest has risen around 0.5% since November and may rise higher throughout the year and there hasn't been much of a change as evidenced by the increase in pending sales in January (26% increase for homes and 31% increase for condos). Another important factor to watch is that home prices remained flat while pending sales outpaced new listings which means that demand is outpacing increase in supply. That usually leads to a strong market.