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2 Reasons House Prices Will Start Falling Sooner Than Expected

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Many real estate analysts predict US home prices will fall as mortgage rates have risen significantly. Some expect a small drop, some a big drop, but most say house prices are downside and “sticky”, which is why home sales are falling. I wouldn’t expect prices to start falling until months after they started.

A good example of sticky house prices is 2006. Nationwide, the number of single-family homes sold has declined. 8% Home prices actually went up in 2006 7% The number of homes for sale fell long before house prices because house prices are trending downward, as economists like to say.

Some sellers decide not to sell if they can no longer get the price they want, so house prices won’t go down any time soon. Many other sellers still want to sell, but are emotionally unable to accept that prices are actually going down and take time to lower their asking prices. It numbs me to think how much money I could have made if I had sold it at.

Future house price corrections are still down, but two changes since 2006 have significantly reduced price stickiness. First, home buyers and sellers are more informed about today’s real estate market. Second, landlords are buying far more single-family homes than they did last year.

more landlords

In a declining market it is much easier to sell than a family living in a home owned by the landlord. Not so for landlords.

Investors bought a record 21% of single-family homes sold in the U.S. in the first quarter of 2022, according to a report. redfinIn the first quarter of 2006, investors bought only 10%. If landlords buy twice as much as he did, home prices should be less likely to fall than they were in 2006.

more data

The much bigger difference between 2006 and 2022 is information Stay informed about the real estate market. It may be hard to believe today, but in 2006, finding the selling price of a home in your neighborhood wasn’t easy. Zillow didn’t exist until 2006. Today, asking and selling prices are all over the internet.

A popular explanation for the 2000s boom was that it was a credit bubble. Today, there are no exotic Liars loans, negative amortization, interest-only mortgages, etc., but home prices still went up. Faster In 2021, despite the lack of a credit boom.

The pandemic-driven housing boom was not driven by the credit boom, but by the plummeting mortgage rates and pandemic-induced shifts in housing demand. But a key factor that fueled the recent boom is usually ignored. Whatever the cause of the boom, the vast amount of online information accessible to home buyers and sellers has accelerated the speed and height of the boom.

Buyers and sellers could see for themselves how fast home prices were rising. Buyers were willing to offer more than they were asking because they could easily see online how prices were skyrocketing and how it was common for homes to sell for more than they were asking for. lessened my anxiety.

The vast amount of information available to home buyers and sellers today is fueling price appreciation momentum, and prices will rise faster and further. reacts more quickly to an increase in , further increasing the price in a feedback loop.

Similarly, the ability for sellers to easily see asking prices, markdowns, and sales price declines in real time should hasten the start of the next U.S. house price correction.

And of course, this time home sellers know that prices can drop. In 2006, many sellers never thought they could do it.

Less sticky

Not all of the crazy 2000s mortgages exist, but today there are far more landlord-owned single-family homes, and everyone has easy access to more information about current local house price trends. I can do it.

There are still some sellers who are slow to lower their asking prices in a softening market, but with much more real-time information about the market, they are likely to lower their prices faster, and home prices fall soon after the sale. may start to start to fall.

house prices are already starting to fall Canada When Australia And in some cities the decline is surprisingly steep. If house prices don’t go as low as experts expect, prices will plunge faster and more sharply in the US as well.

political influence

One final point. If house prices start to fall any time soon, even just a little bit could have a big impact on his November elections this year. This is a recent Forbes.com article, house prices at election time.

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