Research shows that low interest rates drive investors to seek higher yields, which can hurt the housing market. In 18th-century Amsterdam, wealthy investors’ yield-seeking affected housing prices and rental returns. Examination of bond supply changes showed that capital income investors switched their portfolios toward real estate and other higher-yielding assets during low and dropping bond yields. This increased wealth disparity and house price volatility.

Image courtesy of interviewee. December 21, 2023