Bonds do not work like houses. Typically bonds pay out a fixed coupon rate and then 100 at the end of the term (fingers crossed).
The buyer is paying the same TCO in the end so they’ll accept the higher ask from the sellers due to limited supply and the TCO being equal. The Fed is about to start cutting rates so you can watch this happen in real time over the next few years.
Bonds work that way if you hold them to maturity, but the face value is continuously being repriced as rates fluctuate. You don’t have to sell, but that’s how bond pricing works.
Traditionally the face value of bonds is fixed. The sale price is continuously repriced as rates fluctuate.
Grandparent is alleging that in a lower-rate environment sellers will raise prices until buyers' monthly payments are about the same as they are in this high-rate environment.
Didn't we see exactly this scenario play out in 2001-2005 and again during Covid?
> Heading into 2020, affordability was increasing—even in the face of rising home prices—as buyers benefitted from historically low interest rates and steady income growth.
> The national HOAM index fell from 101.94 in February 2021 to 98.22 in March 2021, indicating homes were no longer affordable for the median-income household.
Rates dropped which caused a demand-side surge (because more people could afford the mortgage) which quickly turned into a market dynamic that caused home prices to increase beyond median affordability.
https://www.atlantafed.org/economy-matters/community-and-eco...
Of course lower interest rates tend to push prices up, everything else being equal. The claim was that prices will rise so fast that buyers will be worse off with lower interest rates. That's not necessarily true. It might be true. Sometimes it's true.
I'm honestly a little tired of answering objections from infallible people who haven't quite read the thread or don't quite know what they're talking about.