When Will Home Prices Drop?

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Every time people think of economic downturns or a recession, they correlate it to the market crash in 2008. The huge differentiating factor between now vs. 2008 is the fact that most homeowners are very financially stable right now.

Most people eased off the COVID forbearance plans; I don't see a rise in foreclosures; most homeowners have a ton of equity built into their homes, and no one is borrowing against that equity as they did in the early/mid-2000s before the crash. And it's very hard to get a loan nowadays so those who are currently buying, are very well-qualified.

Simply stated, even in the face of turbulent current events and a potential future recession, homeowners can afford to be able to stay in their homes instead of being forced to sell them en masse as they did in 2008. And it was that mass sell-off that drove prices down last time.

In addition to the financial stability of current homeowners, the inventory is incredibly low nationwide. There are simply not enough homes available for sale, and the demand far outweighs the supply. Millions of new homes would have to come on the market to tip the scale and satisfy buyer demand - and no one sees that happening anytime soon. After all, many homeowners refinanced their mortgage last year to capture super low rates and don’t have much incentive to lose that rate by selling and buying a new home right now.