An Appraiser's View

Do mortgage interest rates affect or effect appraised values? The simple answer is no, and yes. Confused? Let me explain. 
Assuming you are aware of how an appraiser arrives at his or her opinion of value, lets take a look to see if interest rates "affect" appraisal values. Affect is a verb and describes current action, which means something that AFFECTS the appraiser's selection of comparable properties, ie; the presence of a pool, the size of the house, number of baths, location, condition, etc., the appraisers reconciliation of the cost to build a similar home, or the appraisers selection of comparable rental properties. And although changes in the market can make the selection of more recent sales important, that is due to the price they sold at, which may or may not be from the interest rate the buyer received.
But do interest rates EFFECT appraised values? You bet they do. EFFECT is a noun, descriptive after the fact, so current mortgage interest rates AFFECT how much a buyer can afford to borrow, which EFFECTED how much they were able to pay for a home. This is similar to the current job market in a an area. A borrowers employment status AFFECTS how much they borrow, so if an area is depressed, this will EFFECT the values in the area. Understand? No?
Hmmm. That's ok, just try and think of it this way. Appraisers do not determine how much you will buy or sell your house for, or how much the bank will loan you against your house. We report current market conditions like increasing or decreasing values, supply, and demand, which AFFECTS the banks lending decision, and EFFECTS your buying decision.
One last thought. Did you know yo can get an appraised value based on what a property will be worth at a selected future date? It's called a *Prospective Appraisal. It's a handy tool when you are looking at flipping, renting for market appreciation, subdividing, spec building, or holding paper on a loan. One aspect of prospective appraising is determining where the market will be on the chosen prospective date, and historical interest rate trends are part of that equation. So as in all things involving the English language, prospective appraisals are the exception to rule. 

Up next. Math, the English method. 

*If interested in a prospective appraisal or you would like prospective appraising explained, feel free to contact me directly.