Sounds like an Econ 101 homework question... If people thought real estate prices were going to increase they would want to buy. This would cause demand for money to buy houses. Demand goes up, the price goes up (the banks can be picky and lend to only the best qualified or they can go out and raise more money to lend by offering attractive rates). Interest rates would increase in the classical model. good luck! Real estate prices would also go up as demand would increase.
