Why Do Consumers Think Housing Prices Will Fall?

The last two times a higher percentage of consumers believed housing prices would decrease rather than increase were in 2011, in the aftermath of the housing market meltdown, and early in 2020, as the COVID-19 pandemic began.

In those instances, huge events shook the economy and caused tumult in the housing market. Now, a new event is rocking real estate, dampening consumer sentiment, and leading to the expectation of lower housing prices: rising mortgage rates.

Mortgage rates have more than doubled in the past year, and haven’t been this high since 2008.

The ultralow mortgage rates of 2020 turbocharged buyer demand and resulted in a historic jump in home prices. Now that mortgage rates are up, demand is down, and less demand typically means lower prices. 

You shouldn’t be surprised if buyers and sellers also figure that mortgage rates are set to rise further. After all, the Federal Reserve has been clear that it will raise interest rates until inflation abates, and rising interest rates usually drive up mortgage rates.

Source- https://blog.homesnap.com/consumers-expect-home-price-decline/?utm_source=homesnap