Somewhat, but remember that house prices are sticky. If I can't sell my house and get into one with a similar value (both price and features) with near net zero change in my debt and payments I'm likely to stay put. Of course once I decide to move I'll be looking at cheaper and more expensive places, but if I can't break even on a like for like move why would I move? I'll just ride this market out for another 10 years. (note too that my mortgage is less than 3% - one more reason moving anytime soon would be a terrible thing for my life)
If my house is worth less than what I owe then moving (selling short) can make sense.
Houses are not just an investment for most people. There are investment factors, but they are also the place you live. Thus most people cannot just sell or not - they also have to consider where will they live next if they sell. Even if I knew exactly where the bottom would be odds are I'd still not sell because I don't have options to live elsewhere.
~4M homes transacted in 2025. Price levels will decline over time, it's just who has to sell first. Life/forced sales (divorce, death, relo, downsize for costs, etc) are up first vs irrational sellers pining for historical price levels. Foreclosures are rising (especially in Florida, taxes and insurance going up), but not materially imho (yet? tbd based on how the economy holds up, all real estate is local).
Of course there are always people who need to sell for whatever reason. There are a large number of people not in the market who otherwise would be, but that doesn't mean nobody is in the market.
That is one reason. Others are they got a job in a different city. Their health declined and so they can't live at home. They got married and don't need two houses. If you cannot think of a half a dozen others in the next 10 minutes either you didn't try or your need to practice creative thinking.
The reasons are not important for this discussion though - all we need to know is some people have other pressures such that the one I listed isn't compelling to them.
Do note that, even if the math works out such that the bank doesn't actually lose money, a short sale remains on your credit history for the subsequent seven years, which makes it very difficult to buy another house during that period. It's not something you want to do if you can avoid it.
I said CAN not will be worth it. Details of your particular situation matter, for some they should hang on while for others the credit hit is too small to matter. You need accountants and lawyers to advise you based on your exactly situation not internet commenters.
People moving isn't driving the real estate market. It is people dying or being born. Unfortunately you cannot bring real estate and other investments like your retirement entitlements with you when you pass away from this life, so something will happen to your house.
> If my house is worth less than what I owe then moving (selling short) can make sense.
I believe this varies by state but I thought in some states the lender can come after you for the difference and in others you can just walk away (albeit with a credit ding).
What we've seen in Oslo, Norway, is mostly that the market slows down. Those that get lower offers than what it previously was "worth" don't sell. So in the prices graphs it's mostly flat, but then with lower sales total. So it kinda "hides" that things are worth less as it's no transaction. And people don't dare buying before selling, so lead times are quite long.
And then they stop building new stuff while prices are low, so demand will keep prices stable, and when the interest gets lower again prices will probably skyrocket since it's not been built enough in the meantime.
Talking from the Vancouver perspective where we have a similar situation - yes, house prices are going down. People list houses with the same price as 3-4 years ago but most close below the asking price.
> But will lower demand coupled with still high interest rates actually lead to reduced housing prices?
One theory says that either lower employement causes lower demand and therefore lower interest rates OR lower employement causes the FED to lower interest rates to stimulate spending, and in EITHER case the response to your premise of "low employement + high interest rates" should be "interest rates will come down", and separately "low employment implies low demand implies house prices will come down".
Real estate owners will rather let their buildings rot to zero value than reduce their prices. They have juicy government bailouts coming, and social security and pensions to pay for their upkeep. They don't need the money. It was just an investment to get rich without having to do anything, and if it doesn't work, they'll let it rot because they deserve their massive return god damn it!
For more competitive markets, it seems to largely depend on if foreign and out-of-state rich buyers are still interested in buying in an area. The fairly-to-ultra-rich ~5% are driving prices and demand of almost everything in these times.
I'm seeing homes in my neighborhood sit on the market for 3-4 months before dropping prices and finally selling, about 20-25% off the original listing.
What's fascinating to see is that around me the wealthy towns are seeing 6-7% annual appreciation whereas the lower middle class towns are in the 2-3% range.
Ish? Look into towns that didn't have a high reliance on tech. In particular, look for ones that didn't ride the rollercoaster of really high wages that a lot of tech drove and is now flattening off.
Looks like shipping is also an industry that you probably don't want to track on this search. Other than that, places that saw modest wage growth saw similarly modest housing cost growth. And haven't seen it fall back, yet.
Moved out of ATX to somewhere around hill country last year. There were just too many boring, uncool, rich bozos moving in, and I couldn't take it anymore.
The academic consensus is that there is a housing shortage, not a surplus. Perhaps there is a local surplus in undesirable areas, but that isn’t true in cities or nationally.
Austin and Texas in general have less housing restrictions than other places wrt zoning and regulation, so they could plausibly have a surplus. You can only really speak locally about any of this because location determines the market
No, you just happened to build appropriately because a certain subfaction of the population weren't able to pass the typical laws that would stop building.
The housing shortage was created by regulation and it's foolish or selfish to pretend otherwise.
Austin is unique in that most of the harmful self-serving conservatism-as-in-block-and-deny-all-development that city people usually to do is constrained by the rest of the state, and as an obvious result arguably has the highest standard of living in the entire world.
regulation /tends/ to be introduced because builders are misbehaving (bad materials, bad workmanship, building in flood zones, etc), but the bigger problem is NIMBY who then use those laws to prevent other people building in "their" neighbourhood
it's the market dynamics that create under building, not regulations. if regulations are the problem, then how were builders able to build record number housing starts leading up the GFC? and after the crash, housing starts dramatically lowered. were there new regulations introduced during that time period?
highest standard of living unless you're a woman or a trans person, or a person of color, you mean. I'm sure living in a repressive dictatorship is awesome if you're a rich member of the in-group.
