Interest rates significantly influence real estate prices, impacting everything from mortgage rates to investment capital availability. Higher interest rates result in increased mortgage costs, making home buying more expensive. Conversely, lower rates make mortgages more affordable, driving up demand and home prices. Interest rates also affect capital flows, with low rates encouraging real estate development and investment, while high rates can restrict capital availability. Furthermore, real estate investments compete with other investment vehicles such as stocks and bonds. When interest rates rise, non-real estate investments might offer more attractive returns, reducing demand for real estate investments. Understanding these dynamics can help prospective homeowners and real estate investors make informed decisions.