Rather than stalling amid historically low inventory levels and solid lending over the last decade, nominal prices are declining nationally, and according to Bill McBride in the CalculatedRisk Newsletter, prices could fall by over 10% in the year ahead. Without steady income growth, house prices will need to fall in order for a housing affordability crisis to be resolved, and as interest rates continue to surge, experts predict significant double-digit regional price declines in the not-so-distant future.
House prices are expected to decline around 25% in real terms over the next 5 to 7 years, and nominal prices could follow the same trajectory as peak inflation cools homebuyer demand.
Since national house prices increased very quickly during the pandemic - up over 40% - it seems likely that some of the usual “stickiness” will not apply. I think the most likely scenario now is nominal house prices declining 10% or more from the peak, and real house prices declining 25% or so over the next 5 to 7 years.
Advertisement
Related Stories
Market Data + Trends
Vacation and Investment Home Market Insights
A recent report finds beach homes to be the most sought-after vacation-home type and that the investment potential of a second home is an important factor in the purchasing decision
Affordability
How Much Income Do First-Time Buyers Need to Afford the Average Home?
The median-priced home is unaffordable in 44 of the 50 largest U.S. metro areas
Affordability
What Is the Relationship Between Urban vs. Suburban Development and Affordability?
A new paper from Harvard's Joint Center looks at whether expanding the supply of suburban housing could, in turn, help make dense urban areas more affordable
