How Far Will Home Prices Fall
Q: How far do you think home prices will fall? Manny, Jersey City, NJ
A: Every local real estate market is different. Home prices at any given point in time may be rising in one local market, stabilizing in another market and falling in another market. Even during the housing bubble that occurred in the early and mid 2000s after the dot com bust, there were local real estate markets where home prices were declining! There are certain real estate markets that in recent history have tended to have more home price volatility (i.e. Phoenix, Vegas, Bay Area)–I suspect home prices move more dramatically in these markets because they attract more out of town speculators. Many of the local markets where home prices are falling right now also happen to be markets that saw the most dramatic home price increases during the pandemic. Housing supply, housing demand and personal incomes are the most important factors that affect home prices. In the local markets where home prices are falling, prices will stabilize when housing supply and demand reach a tipping point, which is usually at about 6 months of unsold housing inventory. Thanks for your question, Manny.
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