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For years, the housing market has been treated like a patient whose health depends on the Federal Reserve’s “medicine” of lower interest rates. But economist Richard Werner makes a compelling case that this view is backwards: interest rates tend to follow the economy, not lead it. In other words, rates are more like the fever that comes after the infection, not the cure that prevents it.
If Werner is right, then waiting for Fed cuts to “revive” housing markets like Sandy Springs and East Cobb could be a costly mistake.
Sandy Springs & East Cobb: From Surge to Slowdown
Both markets saw massive jumps in home values during the 2020–2022 run-up. Easy credit, pandemic demand shifts, and limited supply combined to push prices far beyond their pre-2020 baselines.
Sandy Springs
- Local MLS stats through mid-2025 show the median sale price well above $650,000, a huge leap from pre-pandemic levels in the mid-$400s.
- However, homes are now taking longer to sell than a year ago, and sellers are granting more concessions, signs that buyers are pushing back.
East Cobb (Marietta)
- East Cobb surged past the $550,000–$575,000 range for median sales earlier this year, up significantly from its roughly $400,000 pre-2020 median.
- More recent MLS data shows a slight dip in average sale prices and an increase in time on market, consistent with a market that is plateauing.
Takeaway: These aren’t crashes—but they are early signals that the frenzied price growth of the past few years is ending.
Werner’s Framework: Credit Is the Driver
Werner’s research highlights that:
- Credit creation leads the cycle. When banks issue new loans aggressively, asset prices rise.
- Interest rates react. Cuts usually come after credit slows, not before.
- Rate cuts can’t force buyers or banks to borrow and lend. If affordability is maxed out, easier financing terms won’t reverse the slowdown.
That’s exactly the situation in Sandy Springs and East Cobb: prices overshot incomes, credit expansion slowed, and the Fed’s future cuts will likely reflect that slowdown rather than spark a new boom.
The Bigger Picture: Stocks, CAPE, and Asset Valuations
Werner’s warning dovetails with Robert Shiller’s CAPE ratio, which currently sits in the high 30s—well above its long-term average. Historically, such levels precede lower returns or asset price corrections.
If equities face a broad re-rating, real estate—especially premium submarkets like Sandy Springs and East Cobb—could see parallel reductions in valuations as wealth effects fade.
Implications for Buyers, Sellers & Agents
- For buyers: Don’t assume lower rates will reignite bidding wars. Price carefully and stress-test affordability.
- For sellers: Price homes to today’s demand, not yesterday’s peak comps. Longer days on market mean buyers are choosier.
- For agents: Educate clients on credit cycles. The Fed’s moves matter, but local lending and affordability are the real drivers.
Final Thought
Sandy Springs and East Cobb are living examples of Werner’s thesis: lower rates won’t automatically “rescue” housing when affordability and credit demand have already peaked.
Instead, the data point to a normalization phase—one that could bring meaningful price adjustments if the broader asset cycle, as signaled by Shiller’s CAPE, continues to turn.
