Experts Predict Lower Home Prices On The Horizon: ‘Housing’s Taken It On The Chin’

The real estate market is potentially facing a downward shift in house prices, offering a respite for buyers while posing challenges for sellers.

What Happened: This week, Mark Zandi, the chief economist at Moody’s, shared his insights in an interview with Yahoo Finance, outlining the conditions for a market recovery.

“The only way out of the box, the only way to get sales back up is mortgage rates have to come down, incomes have to continue to improve, we have to avoid a recession, and I suspect we’ll have to see some house price declines at some point here,” he said. 

Adding to this viewpoint, Glenn Kelman, CEO of Redfin, spoke with Fox News about the housing market’s future. Reflecting on Morgan Stanley’s prediction of a 3% decline in home prices next year, Kelman agreed, saying, “A decline seems not just possible, but likely.” 

This year marked a significant slowdown in housing activity, primarily due to the Federal Reserve’s measures to combat inflation, leading to soaring mortgage rates.

Also Read: Americans Face Historic Lack Of Affordability In Housing Market, Data Shows

Homeowners enjoying lower rates have been reluctant to sell, while high rates have priced out many potential buyers, who are awaiting more favorable conditions.

Zandi also referred to recent data indicating a dramatic drop in home sales to levels not seen in over a decade. He noted the severity of the current market situation, comparing it to the period of the financial crisis.

“Housing’s taken it on the chin, particularly demand,” Zandi said, highlighting recent data that indicated that the annualized sales of pre-owned homes dropped below 3.8 million units in October, which was the lowest figure in 13 years.

“I don’t expect the housing market to come roaring back here, certainly not in 2024,” he said during the interview. “Probably won’t be until 2025, 2026 before we see sales levels that are more consistent with what we’ve enjoyed historically.”

Kelman, on the other hand, observed some positive signs, noting an increase in housing inventory and adjustments in pricing.

“The market has just been frozen because buyers and sellers can’t agree on a price,” Kelman said. “For the first time, there’s a break in the logjam where we might see a real drop in prices, and that is going to spur sales.”

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