When interest rates increase, the demand for commercial and residential real estate will _____ and the price of real estate will _____.

Question

Quizplus · Accepted Answer

When interest rates increase, borrowing costs become higher, making loans for purchasing real estate more expensive. This typically reduces the demand for both commercial and residential real estate, as fewer people and businesses can afford or are willing to take on the higher financing costs. With the demand decreasing, the prices of real estate are also likely to decrease as sellers adjust to attract buyers in a less competitive market.

When Interest Rates Increase, the Demand for Commercial and Residential