When Are Home Prices Going To Fall?

With interest rates on the rise, I've been fielding a ton of questions on when we should start to see home prices fall. Looking at housing numbers, projections, and from my experience in market, I don’t believe they will come down for a while. That being said they may begin to stabilize as the year progresses. For perspective, our local markets on average has been hovering around 1.5 months of inventory. That number was around 5 months at the end 2019. 6 months is a balanced market. Low inventory is the primary reason we are seeing so many bidding wars, which is driving prices up. Simply put, the supply isn't meeting the demand. For home prices to begin to fall we need to be at 7-12 months on inventory. Where is that inventory coming from? Even if we have a wave of foreclosures, move-up buyers pull the trigger on bigger homes, and we have a mass rush to downsize, it’s going to take some time to build up inventory to a level where it’s a buyers market and prices fall. IMO, this will take years, not months. Contrary to popular belief, I do not consult a magic ball when sharing my opinion on the real estate market. This is my opinion as a broker. Having lived in this business for the past decade, I've seen all types of markets; buyers, sellers, balanced, and broken. Nobody can predict what is going to happen. You can use numbers, statistics, trends, and experience to evaluate the situation and make an educated guess on what direction the market might be headed. In the meantime, If you are looking to sell now is still a great time. We need inventory! My buyers are eager to move and my sellers are happy to cash out on their built equity. If you are a homeowner and aren't planing a move, you should still see 3-6% annual appreciation even when the market stabilizes.