Zillow took a look at the areas of the country that will become less affordable as mortgage rates rise to 5%, 6% and 7.1%. What they found? Simply put, there are plenty of places that will become more expensive than their historic norms as rates rise.
What will happen when rates get there? Zillow (Z) economists believe we’ll see more price volatility as consumers have to spend more of their incomes to buy a home, or we’ll see home value appreciation stagnate or fall somewhat as incomes catch up. Zillow says it's not worried about another national housing bubble, but lessening affordability will certainly bring back some uncertainty to what is currently a very hot housing market.