You are still assuming that rates will increase to that level.

Look at this. Interest rates haven't been as high as 12% since roughly 1987. That's more than 2 decades, and it's been almost 2 decades since 2008, where rates were already falling before the housing market crash. 2008 saw some of the lowest housing costs of the 21st century so far because of the amount of foreclosures. And yet, look at that, interest rates were around 6-7% and dropped to about 5%. Of note, the historical average is 7.70%, not the 12% you insist upon going back to.

Neither one of us know what the future holds, but taking modern economics into account shows that rates are unlikely to get high enough to have that make a meaningful difference.

Housing in the 70's and 80's wasn't cheap because of the interest rates. It was cheap because housing was rapidly expanding into suburbs, a suburbification. This is why rates could actually be that high, because the loans were comparatively smaller. You are confusing correlation and causation.

Look at this one:

Housing costs at 12% were not meaningfully cheaper. They were still slowly rising.

You sound like a college freshman at a low-tier midwestern university who just took a freshman business course and is now an expert in the actual economy.

You can’t collapse the assumptions of something as expansive and complicated as a housing market into basic notions of supply and demand. It is, without a bit of irony on your part, that you keep calling out literally everyone in the thread with “lol, don’t you understand basic economics???” More or less what everyone is trying to explain is that freshman level economics is not applicable to the real world here.

The truth that you can’t see is that your framework is just too overly simplified to matter here, as are your conclusions.

It does the opposite of proving your point. Interest rates do not meaningfully decrease the cost of housing the US. If that were the case, my house should be cheaper for me to buy now, since interest rates are 3.3% HIGHER than when I bought, right?

Yet, my house is almost $150k more expensive than when I bought it just 6 years ago. My mortgage would be much more expensive, not only because interest rates are higher, but also because the US treats housing as an investment, a bad practice yes, but it causes it to only meaningfully drop when the economy is terrible.

Let's break it down for my home.

With my 3.2% interest rate, I will pay $194,908.25 in interest on my loan by the time I pay it off. This is on top of my $350,000 loan, so $544,908.25 is what I will end up paying in total. I bought below market value at the time, and now my home is worth nearly $500,000 just 6 years later, which just about negates the interest if I were to sell now. If I bought the same home, now, with higher interest rates and property values, this comes to the following: $646,615.21 total interest paid(!) on a $500,000 loan @ 6.575% for a grand total of $1,146,615.21.

In what way, exactly, would I save money here? It doesn't save money, even if I bought when it was $250,000 @ 6.575% (to pretend your scenario is accurate and that it reduces home prices). That would make me have to pay $323,307.60 in interest, substantially more just to end up in roughly the same spot. And no, housing prices here didn't drop by $100k when interest rates went up this year. They didn't even drop by $25,000. They dropped roughly $15,000. That's it. Peanuts.

So you are still incorrect, and doubling down is only making you even more incorrect here. Show me exactly where the higher interest rates magically make the housing market cheaper, I'll wait, because according to you, I should sell my house and get a better deal right now. I'm all ears, and I've done what you said and brought out the calculator, and it's just not adding up to be a better deal at higher interest rates.

You do realize how fucked housing is in the US, right?