When Will Home Prices Fall? Here’s What Experts Predict


Soaring mortgage rates, tremendous demand and limited inventory are pushing home prices up, but some experts say relief is on the way. Just not in the near future.

Home prices grew 20.6% year-over-year in March, the fastest annual surge in 35 years, according to a report released Tuesday by S&P Global. In some cities, that number is even higher: Tampa (34.8%), Phoenix (32.4%) and Miami (32.0%) saw the largest price gains.

The data, which comes from S&P’s CoreLogic Case-Shiller Index, tracks the value of single-family housing in the U.S.

It gets reported on a two-month delay, and prices continued to rise beyond the month of March, albeit at a slower pace. The median sales price of an existing home (not new construction) in April was $391,200, according to data from the National Association of Realtors (NAR). That’s 14.8% higher than in April 2021.

Experts generally agree that prices this high, combined with mortgage rates above 5% and soaring inflation, are not sustainable in the long term, since they price so many buyers out of the market. Soon, sellers will have to adjust.

“As buyer confidence sags and weighs down demand, real estate markets will re-balance, eventually tilting away from the heavy advantage that recent home sellers have enjoyed,” Chief Economist Danielle Hale wrote in a blog post this week.

When will home prices fall?

Nearly 20% of sellers dropped their prices during the four weeks ending on May 22, according to data from Redfin. But that doesn’t mean that houses are getting more affordable just yet.

Because mortgage rates are so high, the monthly payment on a home listed at the median asking price was $2,425 during that same period — $717 higher than a year prior.

Buyers looking for newly built homes also face historically high construction costs thanks to supply chain issues and material shortages.

Mark Zandi, the chief economist at Moody’s Analytics, predicts prices will eventually flatten across most of the country, especially in the hottest housing markets of the pandemic era — like Boise, Colorado Springs, Las Vegas and Phoenix.

“Sky-rocketing house prices are set to come back to earth as higher rates crush affordability,” Zandi tweeted last week.

For now, those waiting to buy until the market cools will have to keep biding their time.

“Although one can safely predict that price gains will begin to decelerate, the timing of the deceleration is a more difficult call,” Craig Lazzara, Managing Director at S&P Dow Jones Indices, said in a news release.

Written by Sarah Hansen for

THE BIZ: The housing market hits a level not seen since the last bubble



You’d be hard-pressed to find housing economists proclaiming that the ongoing housing boom is nearing a 2008-type bust. In fact, many say the opposite, based on the belief that the demographic wave of millennial first-time homebuyers, elevated wage growth, and limited supply will all continue pushing the market upwards. Every major real estate firm with a publicly available forecast, including CoreLogic and Fannie Mae, predicts that home prices will go even higher over the coming year.

That said, the red-hot U.S. housing market is beginning to hit levels not seen since our last housing bubble.

Black Knight, a mortgage technology and data provider, showed Fortune an analysis on Friday that finds the typical American household would now have to spend 31% of their monthly income to make a mortgage payment on the average-priced U.S. home. That’s up from 29% just one week earlier, and up from 24% in December. Black Knight’s mortgage-payment-to-income ratio—which averaged 19.9% during the 2010s decade—hasn’t topped 31% since September 2007.

What’s going on? The economic shock caused by soaring mortgage rates over the past few weeks has dramatically increased mortgage payments for new homebuyers.

Back in December, the average 30-year fixed mortgage rate stood at 3.11%. A borrower taking on a $500,000 mortgage at that rate would owe $2,138 per month. Now that the average rate is at 5%, that loan if issued today would cost $2,684 per month. Over the course of the 30-year loan, that’s an additional $196,700.

In March, a team of researchers at the Federal Reserve Bank of Dallas got the attention of the real estate industry after publishing a paper titled Real-time market monitoring finds signs of brewing U.S. housing bubble. They found that recent U.S. home-price growth—which is up 19.2% over the past 12 months—is once again becoming “unhinged” from economic fundamentals.

However, the Dallas Fed researchers don’t see this as a 2008 repeat. Sure, many new homebuyers are getting stretched financially in a way that resembles buyers during the last bubble. But that’s just new homebuyers. If you look broadly at homeowners, they’re doing quite well.

As of the fourth quarter of 2021, only 3.8% of U.S. disposable personal income was going toward mortgage debt payments. At the height of the 2000s housing bubble, that figure was nearly double at 7.2%. This time around, households’ balance sheets look healthier, and more homeowners have paid off their mortgage altogether. In addition, the shady lending practices of the aughts were regulated out of the market by the 2010 Dodd-Frank Act. Simply put: If a storm does come, homeowners, in theory, should be better positioned to ride it out.

“Based on present evidence, there is no expectation that fallout from a housing correction would be comparable to the 2007–09 global financial crisis in terms of magnitude or macroeconomic gravity. Among other things, household balance sheets appear in better shape, and excessive borrowing doesn’t appear to be fueling the housing market boom,” write the Dallas Fed researchers.

It’s possible the affordability crunch created by soaring mortgage rates could be a good thing. That’s according to Logan Mohtashami, lead analyst at HousingWire. Spiking mortgage rates, he says, could take some steam out of the market and give inventory a chance to rise a bit. If that happens, it could slow down the rate of home price appreciation and reduce the likelihood of the red-hot housing market culminating in an overheated market—or even worse, a housing bust.

“Higher mortgage rates are the best thing for housing because we are in a savagely unhealthy housing market, and we need to get off these extreme low levels of inventory,” Mohtashami told Fortune. “It isn’t too much or bad credit chasing homes this time around. It’s too many people chasing too few homes. We desperately need a breather.”

According to Redfin, spiking mortgage rates are already softening the housing market a bit. The brokerage platform is seeing slightly more home listings with price cuts and fewer bookings for home showings. However, we’ll need to wait a few weeks—or months—before we can be sure that the housing market is actually softening.

Link to article here:


THE MARKET: Home value increases surpassed median salaries in 25 metro areas last year, report says



The term “household income” was given new meaning in 2021 as a banner year for home appreciation found houses themselves earning more than the median worker in major metros across the country. 2021 was a year of haves and have-nots, and the chasm between the two widening throughout. Those who owned a home saw their household wealth increase dramatically. But many renters witnessed that dream either soar out of reach or had to drastically adjust their expectations and plans.

Home value appreciation in 2021 was higher than median wages in 25 of 38 major metropolitan areas, with appreciation reaching higher than $100,000 in 11 of them. Though San Jose has the highest median salary at $93,000, it also led all major metros in annual home value appreciation — with the typical home growing a whopping $229,277 over 2021, nearly what oral surgeons make. 

Expensive coastal markets in California and Hawaii saw home value growth wallop incomes by the largest amounts. San Jose led but San Francisco closely followed, with homes earning $129,914 more than the median salary. Boise, Salt Lake City, Seattle and Phoenix rounded out the top 10. 

Metropolitan areas with the lowest home price appreciation relative to median salaries were Detroit, St. Louis and Baltimore, though even the smallest home value growth among these metros, in St. Louis, was still higher than $27,000. 

While homeowners watched their assets multiply in 2021, the chasm separating many renters from homeownership widened, as home prices skyrocketed and rising rents eroded their ability to save for a down payment.

Rents rose 16% across the U.S. in 2021 and upward of 25% in popular Sun Belt locales like Miami, Phoenix and Las Vegas. Locking in a one-year lease on a typical U.S. rental cost $3,072 more at the end of the year than the start of the year. It was $7,104 more in Miami, $4,644 more in Phoenix and $4,380 more in Las Vegas — major hits to a household budget, as that money can’t be saved toward a down payment. 

At the same time, down payments — often the highest hurdle to homeownership for first-time buyers — rose by more than $10,000 in 2021 for a typical 30-year fixed mortgage. Sticking with our metros used in the rent comparison, typical down payments rose nearly $14,500 in Miami, more than $20,600 in Phoenix and $16,700 in Las Vegas. 



6 reasons you should sell your home right now



While it’s a notoriously tough time to buy a home, the incentives to sell the one you’re in could be too good to pass up.

Most (89%) of current homeowners who want to list their homes right now say something is preventing them from doing so, according to NerdWallet’s recently released 2022 Home Buyer Report. The most commonly cited roadblocks: concerns about finding a new house and paying too much for a new house.

It’s true that finding a home and especially finding one that fits all of your needs is a challenge right now. Competition over the few homes on the market is driving prices up. It’s taking multiple offers and sometimes a hot tip on a house not yet listed to close a deal. However, current owners have an edge. By making the most of the market on the seller side, they’ll enter the buyer side with more money to fuel their buying power.

Buyers want your home

Inventory is so low, there are likely multiple buyers looking for a home like yours right now.

In 2019, there were 1.3 million homes on the market in any given month, on average. By 2021, the number of active listings had fallen by 57%, to 540,000 on average, according to NerdWallet’s analysis of data. There was already a home shortage before the pandemic, but COVID-19 took a bad situation and made it worse. Now, homes are selling within days, not weeks or months, and commanding multiple competitive offers. That demand shows few signs of letting up.

Nearly 26 million Americans say they plan to buy a home this year, according to the Home Buyer Report. That number is unrealistic — typically 5 million to 6 million homes are sold each year — but it does indicate the flood of buyers isn’t likely to subside.

Selling now may mean a bigger profit

High demand in the face of low supply has made for record high prices. This means you’re more likely to pay off your current mortgage and walk away with a profit than you would’ve been just a few years ago.

Homes are also being listed at higher prices, and selling at or above asking price. In fact, buyers typically paid 100% of the list price in 2021, and 29% paid more than list price. While the sales price represents your ultimate financial benefit, getting offers over what you expect brings added excitement to the transaction.

Typical sale prices grew from $270,000 on average in 2019, before the pandemic, to $344,000 in 2021, according to data from the National Association of Realtors. And in some places, they’ve grown even more.

About three-quarters (74%) of sellers did not have to reduce their asking price at all in 2021, compared with 60% in 2019 and 39% a decade ago in 2011, according to NerdWallet’s analysis. The analysis covered 10 years of data from the NAR’s annual Profile of Home Buyers and Sellers report.

Closing day may come more quickly, with fewer sacrifices

Buying or selling a home is never a stress-free transaction, but selling now is far easier than in recent years. Not only do you stand to have multiple competitive offers, but you’re also more likely to cruise through closing with fewer frustrations.

Homes are moving quickly

In 2021, homes were typically on the market for a single week, compared with 3 weeks in 2019, and 11 weeks in 2012 and 2013, according to our analysis of NAR data.

Sellers are having to give up less

It’s relatively common for sellers to do some wheeling and dealing during the closing process — offering a warranty or money for repairs to the buyer, for instance. But those perks have become less common.

Almost three-fourths of sellers didn’t offer any incentives to attract buyers in 2021, compared to about 60% 10 years ago, according to our analysis of NAR data. The share of those offering a home warranty fell from 23% to 13% during that same period, and the share of sellers assisting with closing costs fell from 20% to 9%.

You’re more likely to walk away pleased

Closing on a home sale can leave you with lessons learned, if not regrets. But in this market, that’s less likely. Seven in 10 (70%) sellers walked away from the home selling process “very satisfied” in 2021. A decade ago, just 54% could say the same, according to NAR data.

Also read: ‘We live 5 minutes from our in-laws who have a larger home’: Is it a good idea to swap houses? Will I end up with a surprise tax bill?

So, should you list?

If you’ve been thinking of selling, but are on the fence because you don’t want to join the competitive pool of buyers, consider these questions:

Are you willing and able to move somewhere more affordable?

If yes, the profits from your sale will go further in a less competitive market. Not everyone wants to move to a rural setting (like I did), but your offers will be more attractive to sellers in areas where demand isn’t as hot. You’ll be able to make a larger down payment and possibly reduce your new mortgage’s term, both of which stand to save you considerably over the long term.

Are you ‘over’ homeownership?

If yes, it’s perfectly fine to go back to renting, or move in with someone else who has a deed or a mortgage. Owning a home isn’t for everyone, and it doesn’t have to be forever. Further, owning a home can be expensive — 1 in 5 homeowners say affording home repairs and maintenance is among their top financial stressors for the next two years, according to the NerdWallet 2022 Home Buyer Report.

Are you highly motivated?

If yes, you’re more likely to have what it takes to be a buyer in today’s market. Finding a house you like will take time, and you might have to make offers on several homes before you go under contract. Being tenacious and knowing what challenges await you can better equip you for the potential battle ahead.

Written by Elizabeth Renter for

The housing Market Had a Wild 2021. Here’s What Awaits in 2022


FROM CNN .COM: The US housing market has had a white hot 2021. Home sales are on track to reach the highest level in 15 years, with an estimated 6 million homes sold in 2021.

But whether you benefited from this surge depended a lot on if you were selling a home or buying one.
Homeowners saw average home prices skyrocket nearly 20% through the third quarter compared to a year ago, according to the Federal Housing Finance Agency. It was the largest annual home price increase in the history of the agency’s House Price Index. And, in some hot markets, the price increase was double that.

Homes also sold at a record pace, with sellers often fielding multiple competing bids and all-cash offers. Even homes that were disgusting or burned out sold quickly, and at amounts that were well over the asking price.

For buyers, it was a different story. While mortgage rates kicked off the year at record lows, it was difficult to even find a home to buy. Inventory of available homes reached an all-time low early in the year and competition was extremely stiff.
Many prospective buyers left the market dejected and without a home to call their own. As a result, demand for rentals surged and rents went up across the country.

“It was an insane year,” said Matt Holm, an agent with Compass in Austin. Last January, he put a smaller five-year-old home on the market at $425,000, higher than comparable sale prices, and was flooded with offers. “I stopped counting at 35 offers,” he said. The home sold for $545,000, a 30% increase over the list price.
Another buyer, who bought a lakefront luxury home for $6 million in 2020, was offered $9 million a few months later and $11 million two months after that by buyers desperate for a lakefront property, Holm said.
“My sellers said, that’s a lot of money,” Holm said. “They wanted to sell and get something as good or better. But they realized they shouldn’t sell because to get something a little bit nicer than what they had was going to cost $18 to $20 million. That is a remarkable jump for a calendar year.”
Without a doubt, the housing market was on a wild ride in 2021. Here’s what to expect as we head into the new year.

No more record low mortgage rates

The year began with the lowest interest rates on record, with average rates for a 30-year fixed rate mortgage at 2.65%. But they didn’t last long. By April 1, that had reached a 2021 peak of 3.18%. Rates have fluctuated since, with the 30-year fixed at 3.05% last week, according to Freddie Mac. And we can expect rates to move even higher in the new year.

The Federal Reserve has given several signals that its pandemic monetary policy will come to an end as it works to curb inflation. Ultimately, that will push interest rates higher.
The Fed’s revised policy won’t put a dent in the pockets of people looking to purchase a home within the next few months, but they might want to act soon, said Melissa Cohn, the regional vice president and executive mortgage banker of William Raveis Mortgage.
“Mortgage rates should remain range bound around 3% through the end of the year and hopefully through the first two months of 2022,” said Cohn, who anticipates rates to increase by up to a half a percentage point over the next couple of months.
Similarly, Lawrence Yun, chief economist at the National Association of Realtors, expects the 30-year fixed mortgage rate to increase to 3.7% by the end of next year, but noted this will still be lower than the pre-pandemic rate of around 4%.
“Increased mortgage rates, coupled with inflation eating away at savings, will take a toll on buyers,” said Allison Salzer, a Compass agent in San Francisco. “It will affect the lower-priced and median-priced home purchasers more than the luxury buyers.”

Inventory will remain tight

Even though more properties became available as the spring home buying season heated up this year, there were also more people looking to buy, creating fierce competition and pushing prices skyward.
There were so few homes, people were taking extreme measures like offering to buy the seller’s next home for them, giving thousands of dollars to competing buyers to walk away and paying as much as $1 million over the home’s asking price. One home in Maryland received 76 all-cash offers.
Inventory was tightest at the lower end of the market. Homes priced under $200,000 have been hard to come by, with the number of available properties falling 19% this year compared to last year, while there was a 40% annual increase for homes above $600,000, according to HouseCanary, a real estate data company.
While the inventory picture is expected to improve in 2022, it isn’t expected to perk up by much. Inventory will remain limited and grow by only 0.3% in 2022, according to a forecast.
“The greatest factor I see affecting the 2022 housing market is the low inventory,” said Paulo Prietto, a Compass agent in Orange County, California. “While inventory remains low, buyers will become more accustomed to the lack of choices and will continue to aggressively compete to purchase homes.”
As long as that happens, prices will continue to go up.

Home prices will keep rising

Home prices rose nearly everywhere in the country in 2021.
While existing home sales reached a median price of $353,900 by November, up 13.9% from a year ago, new construction home prices were even higher. New construction homes hit a median price of $416,900 in November, according to the US Census Bureau, about 19% higher than a year ago, and another new record.
While we won’t see the double-digit gains that were made in the past year, prices are expected to keep rising in 2022 at a slightly more moderate pace.
A group of 20 top economic and housing experts brought together by the National Association of Realtors projected that median home prices will increase by 5.7% next year. The NAR survey participants said they expect the housing market and broader economy to normalize next year as the Fed tries to tame inflation.
“Slowing price growth will partly be the consequence of interest rate hikes by the Federal Reserve,” Yun said.

First-time buyers will continue to face challenges

The prevalence of all-cash offers, few available homes and skyrocketing prices pushed many first-time buyers out of the market in 2021.
By the end of November the share of first-time buyers had fallen to 26% from 32% a year before, the lowest level since the National Association of Realtors began tracking in 2008.
“We are creating a divided society,” said Yun. “People don’t feel like they are participating in what they consider to be American life through homeownership. All their work to build up savings can feel less meaningful in the face of rising prices.”
Not only were prices rising faster than people could save for a down payment, many mortgage types favored by new homebuyers, like FHA and VA loans, were often passed over for all-cash deals or conventional loans.

The inventory of homes at the lower end of the price range was so tight that the number of sales priced between $100,000 and $250,000 were down by nearly 20% in November, according to NAR.

And while new construction homes are now starting to come on line, most are priced outside of the typical first-time homebuyer’s budget.
“Builders are focusing more on high-priced houses, with the percent sold for under $300,000 falling to just 14% from 33% a year ago,” said Robert Frick, corporate economist at Navy Federal Credit Union.

But many hopeful homebuyers are saying they will be back in the spring, armed with the knowledge they gained from a frustrated search this past year, according to a recent survey from

“Despite a challenging year, aspiring first-time homebuyers are surprisingly optimistic about 2022,” said George Ratiu,’s manager of economic research. “They’re looking at the new year as a fresh opportunity to make their dreams of owning a home come true.”


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