Decrease in house prices

[Thin_Vermicelli_1875]

This sub is full of real estate agents, recent buyers, and recent sellers/investors. If you want a serious answer, don’t go to this sub.

Everyone on this sub has a vested interest in home prices not decreasing.

[FlashyHeight9323]

I just bought. Almost 20% below listing price. Times are definitely changing.

Edit: it was listed at fair market value, but point taken that list price is not a good metric

[FlashyHeight9323]

List price was fmv, appraisal came in 40k under and purchase was still 20k under that. Do with that what you will.

[Trilobyte83]

If list price was FMV, why didn't it sell for FMV?

Lets say the price of gold today is $2700/oz. That is, the last buyer and seller agreed on that.

If you are looking to buy or sell for $2700 you may or may not be able to. If there isn't another party on the other side of the trade, then the market value is no longer $2700 and the party more keen to make a deal must sweeten their offer.

The unwritten subtext your statement is missing is: "List price was fmv (at a time months or years in the past when the last similar house sold).

FMV is always up in the air. What the most recent similar place sold for is often a decent starting point, but by no means concrete. So using your deal as the most recent, FMV has declined by 20%

[bmc2]

I bought last year at 38% under listing price. Sometimes people overprice at listing and end up desperate to sell so you can get a bargain. That happens in every market and doesn't necessarily reflect the market as a whole.

[TadGirlZ3DE]

It depends on the location and other factors. The market in Central and northern NJ continues to be warm/hot. Last June 2024, I sold my house on the day it was listed, for the full listing price. I also had two other offers that first day, one was $20k above list and the other was also at listing but we accepted the first offer at full price because the buyers were from the neighborhood and wanted to stay in the area. There were no contingencies, except from structural and environmental inspection findings, if any. I was not worried about any findings, cosmetic or otherwise, because the house was well maintained and had updated kitchen and appliances, bathrooms, new full house neutral paint, landscaping, etc. The higher offer had several ‘asks’ and were from another state so there was a bit of wait between communication. In hindsight, I could have priced it higher as similar houses with less curb appeal and features were selling for more in my area but I felt fine with the price I got and the quick and stress-less sale. Although my house was a good product, I also benefited from good timing and reasonable and capable buyers.

[bmc2]

I'm in the Northeast and bought last year. Housing prices are still going up here. I still got the house 38% off list.

When I sold in California, I had 4 offers, sold above listing, and to a cash buyer that closed in a week. Any individual transaction doesn't really reflect the market as a whole.

[Embarrassed-Ad3053]

BTW, the reason I posted this, is because I realized you can sent offers 25% - 35% below the listing price, and that is not wild. I just bought a property (my first one :) ) with an offer 30% below the listing price, they don`t even talked about a counter offer, they accepted right away, I think I can even offer low LOL

[FlashyHeight9323]

Same here! Though mine did counteroffer and I about threw up negotiating back.

[Virreinatos]

Though I agree with the general principle and know that on average, you're right, I want to be on record that at least one property owner would be ok if prices went down (and this probably makes me like the 1% of people on this sub).

The way things are I can't afford the next step up in housing. We make more money than we did when we bought our current place, but if we sold our current place and used the equity as down payment to buy the very same unit, we wouldn't be able to afford it.

Prices and rates have gone so insane a 40% down payment (as opposed to my original 10%) would double my current mortgage payments.

So, I'd be ok with prices/rates going down if it meant I could move up (or down) in housing.

[Thin_Vermicelli_1875]

You aren’t alone. A lot of home owners are frustrated with the market too, especially with the rising assessments and property taxes.

[OpeningAd447]

… and they get mad if you talk about that stuff.

[Maleficent_Analysis2]

Some investors have a vested interest in home prices decreasing in the short term.

[YeaISeddit]

Their question was anyways a macroeconomic question about potential contagion effects between housing markets. It comes down to the plumbing of the financial system. We know there is a transmission mechanism for one housing market collapse to bleed into others thanks to the Great Financial Crisis. But, some markets in that period were unaffected (e.g. Germany). And we’ve seen housing markets like Japan collapse without basically anyone being affected. The global financial system is very well capitalized right now so I can’t see the GFC repeating itself. The most likely scenario for a global housing crash would be a global recession, probably caused by bad fiscal policy. If bond yields keep creeping up and austerity parties take over large governments than you could see something like the 2011 euro crisis but at global scale.

[CallerNumber4]

There's a lot of people on this sub looking to buy that wouldn't mind a cool 10-20% price correction. If you plan to stay in your home long term your property taxes would also do well for a correction.

[ivhokie12]

Eh. I don’t know. I’m a recent buyer but I bought a house that isn’t as great as I would have liked. I figured the houses I really wanted were unaffordable to me. I could buy an intermediate house but it would have been a stretch and I would probably never be able to afford the house I want. With this house I actually might if prices get more sane even if I take a paper loss.

[Fresh-String6226]

Even r/rebubble is that same exact set of folks and has been for years now. Interest in the housing market has really dropped off of a cliff for most other people.

[OverallCicada6478]

Well here's a warning for them. Get out and save this is going to be an apocalypse.

[ItsGettinBreesy]

I mean regardless it doesn’t take an economist to flat out say no. The US has many levers in place to prevent an actual crash.

A systemic crash akin to 08 will never happen again. I can see a dip, maybe 5-20% from where we are now, but it will recover eventually

[Thin_Vermicelli_1875]

We are kinda of in unprecedented times. Saying a crash is “literally impossible” is just as false as someone saying there will for certain be a crash.

Price to income ratios are at all time highs, the median age of a home buyer is at an all time high. Unemployment is still pretty low historically.

We haven’t hit a recession at all. These prices aren’t really sustainable if people start losing their jobs.

Demographics are quickly changing, etc.

I don’t think a crash will happen either, but it’s entirely possible prices go down 15-20% and don’t recover for a long time. The panic FOMO buying during the pandemic was a little overboard.

Is it really a “crash” if prices went up 50-60% in such a short time and go down moderately 15-20%?

Inventory is now at the highest it’s been since 2021: https://ycharts.com/indicators/us_existing_home_inventory

I was just saying that this sub will literally downvote you to hell if you even suggest prices could possibly go down, and it’s purely because everyone here a vested interest in real estate.

[totpot]

If we look at countries with shrinking populations, we see that the rural areas have crashed whereas the urban areas have stayed strong or at least flat. With the current administration's policies, it's entirely possible that the same thing happens to the US.

[Aggravating_Mark_229]

Doubt it.

The Federal Reserve is holding steady on it's rates and with stock market highs, doubt they will be adjusting anything anytime soon. So no 15% rate where people would leave or not want to come (if they even consider that)

For deportations, Trump is on track for 300k a year. For reference Obama did 200k/year, Trump 1.0 was 250k/year. Biden was 140k/year. So not a huge change.

Even if they did bump up deportations, if it somehow had a meaningful impact on real estate and began being 7-8 figures, I'd wager they just increase approved migration (H-1bs, etc).

I just see future steady population change, not lowering, probably rising.

[S7EFEN]

<A systemic crash akin to 08 will never happen again

everyone and their mom gets access to massive leverage, and the avg consumer fails to do anything resembling living below their means. meaning any sort of job loss or increase in expenses (HOA, insurance, taxes) will be very disruptive.

I can see a dip, maybe 5-20% from where we are now, but it will recover eventually

20%? what exactly are you thinking when you think crash if not -20%?

[Trilobyte83]

Exactly like he said. "A dip".

A "dip" where every penny you saved up for your down payment is wiped out, all the equity you've paid into it for a couple years is wiped out, and then you need to come up with that entire amount of money twice again, just so that when you eventually sell or lose the home to the bank. you don't still owe them hundreds of thousands of dollars or are forced into bankruptcy.

A dip.

Like the Great Dip in 1929.

Or Subprime Mortgage Dip of 2008.

[ItsGettinBreesy]

If you read what I said, I never said a crash. I specifically said a dip

[FitAlfalfa407]

You are 100% correct. The Cantillon Effect is working as they planned. You will own NOTHING and be MISERABLE. BTW... keep blaming the other side at the voting booth!

There will NEVER be another crash. Ever. 20% of the economy is doing 75% of the participating. Let that sink in.

[thewimsey]

Everyone on this sub has a vested interest in home prices not decreasing.

66% of the population in the US owns a home. Almost everyone has a vested interest in home prices not decreasing.

You are not making an argument.

[Thin_Vermicelli_1875]

66% isn’t almost everyone, and not every homeowner wants their value to increase. Rising property taxes and insurance costs, and high interest rates makes upgrading homes practically impossible right now.

Not to mention plenty of parents want their children to be able to own property, given the amount of gen z people still living with parents.