Fourth, the main fiscal remedy for an overheated real estate market is to raise interest rates. To explain, higher interest rates increase mortgage costs which can discourage real estate purchases.
Notably, the Federal Reserve raised interest rates on 20 December 2018, which is spooking Wall Street. An interest rate hike can backfire because it could not discourage real estate speculation.
Thus higher interest rates can lead to a zombie real-estate market. Higher-interest rates cause zombie real-estate because people will wait for rates to buy or fall to list properties.Read more