Quote:
Originally Posted by opendoor
That basically never happens.
What has happened in the past though (and probably will this time as well), is prices have stagnated, rates have dropped because of an economic downturn, and wage gains/inflation improve affordability over time.
So for instance, if you compare a mortgage today at 6% to one 5 years from now at say 3.5%, the latter is about 35% cheaper in today's dollars. So even if prices don't drop a penny, the affordability increase is about equivalent to a 35% reduction in prices.
That's exactly what happened in prior eras. From 1990 to 1995, sale prices were relatively flat (at least nationally), but after interest rate cuts and inflation, houses were about 40% cheaper to own in 1995.
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Theoretically, if wages catch up to the inflation we have been experiencing, even flat housing prices should should result in a pretty dramatic drop in, inflation accounted for, value. By the time everything is said and done, you're probably looking at 25-30% total inflation since 2020.
As of the end of Q1 2023, housing prices are already down 12%, once adjusted for inflation, from their peak:
https://www.globalpropertyguide.com/...e-price-trends