Property Valuation
What is the relationship between interest rates and real estate values?
AHigher rates always increase values
BHigher interest rates generally decrease purchasing power and property values✓ Correct
CInterest rates have no effect on property values
DLower rates decrease values by reducing investment returns
Explanation
Higher interest rates increase borrowing costs, reducing buyers' purchasing power and demand, which typically leads to lower property values. Lower rates have the opposite effect, stimulating demand and prices.
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