The housing market is slowing down. Higher interest rates and sky-high prices have curbed housing demand, and we’ve seen purchase applications and existing home sales both decline (illustrated in the two charts below). Public opinion, and expert opinion, couldn’t be more divided. Some are predicting a housing crash while others strongly believe that housing prices will not decline at all. Experts on both sides are selectively presenting data to tell the story they believe to be true; those calling for a crash point towards the sharp rise in prices, unaffordability, and drop in demand as reasons that housing prices must crash. On the other side of the fence, those that believe prices will not fall point towards a lack of inventory and rarity of housing price declines as reasons to expect prices to continue to rise or stay flat.
Good point about the relative supply being stronger than it may seem based on high level stats. My thoughts for the coming couple of years is there will be some local markets that stay strong and will see minimal price declines, and others where we’ll see significant declines, but nowhere near the subprime mortgage crash …
Great article Daniel. I think housing will revert to long term price to median income ratios long term. If inflation and wage growth stay high maybe housing stays flat or declines only slightly. If we go into a bad recession I think prices will drop a lot.
Good point about the relative supply being stronger than it may seem based on high level stats. My thoughts for the coming couple of years is there will be some local markets that stay strong and will see minimal price declines, and others where we’ll see significant declines, but nowhere near the subprime mortgage crash …
Great article Daniel. I think housing will revert to long term price to median income ratios long term. If inflation and wage growth stay high maybe housing stays flat or declines only slightly. If we go into a bad recession I think prices will drop a lot.