IRVINE, CA—The imminent threat of rising interest rates is encouraging both sides of the housing market to participate, but the sector will need more than that on a long-term basis to drive demand, RealtyTrac's VP Daren Blomquist tells GlobeSt.com. In a recent report from the firm, Blomquist noted, "Home price appreciation is slowing, a trend that will continue if interest rates rise in the coming months as expected. Meanwhile the threat of rising interest rates combined with lowered premiums for buyers using FHA loans is spurring more demand." We spoke exclusively with Blomquist about the effects of imminent rising interest rates on home buyers and sellers.

GlobeSt.com: Which provides the housing market with greater demand: the imminent threat of rising interest rates or the sustained low-interest-rate environment we've been experiencing for some time now?

Blomquist: The imminent threat of rising interest rates is giving the biggest boost now.

GlobeSt.com: What impact does the threat of rising interest rates have on sellers or potential sellers?

Blomquist: For move-up sellers, this is also providing an extra dose of motivation to sell and move up before interest rates rise.

GlobeSt.com: If/when interest rates do rise appreciably, what will housing demand drivers be?

Blomquist: If they rise gradually, interest rates will continue to serve as a demand driver in the short term, but in the longer term (more than a year out), the market will need to depend more heavily on job creation and rising incomes to drive demand.

GlobeSt.com: What else should our readers know about housing demand?

Blomquist: There is still a lot of pent-up housing demand from the housing crisis in the form of arrested development in Millennial household formation and households that lost homes to foreclosure. As long as affordability remains manageable and the economy continues to improve, we should see solid demand for the next three to five years.