The 30 years of Manhattan data provided an interesting data set to study real estate prices. We looked at the relationship between 30-year mortgage rates and the average price of a Manhattan apartment over this 30 year period in the hopes of showing a relationship between the two quantities. The data did not support the usual claim that rising interest rates causes a decrease in market prices, and dropping interest rates causes an increase in market prices.

Why might this be? Well, the psychology of the markets is not the same as the psychology of people. While the assumption about interest rates affecting real estate prices might make sense for an individual, there are other factors involved. Other factors that influence the real estate market could be the health of the economy, supply and demand issues, local variability, taxes and maintence costs, transaction costs, savings rates, etc.

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