4 ms·

This should be happening, but prices do not seem to be falling in-line with what we would expect. I have no answer as to why this is.

whimsicalism 4y ago
Homeowners are just reluctant to lower, so they are happy to sit with fewer sales and higher prices. It will go down, it is just sticky because nobody wants to admit their home is worth less.
bredren 4y ago
Be more patient. Watch Canada and Australia.
Sin2x 4y ago
There is a lag.
gedy 4y ago
It just takes time. Even in 2008 prices took a few years to bottom out.
lazide 4y ago
It takes years for existing sellers to wake up to market shifts, unless they’re desperate is why. If it’s a nicer area, many can ride it out through an entire bust cycle. Most folks can get 30 yr fixed rates, so any area where most owners have stable employment and/or strong capital reserves, can cruise with zero movement for years if conditions aren’t favorable, barring estate sales, forced sales from divorces, etc.
- c0nsumer 4y ago
  Your second sentence is the position we're in. We were very fortunate to buy a house in a nice area a year ago. Right at the peak, but it was a fixer-upper from a friend, so we got a good deal and skipped a lot of fees/commissions. Even with what we've put in to fix it up, we should still be above water post-dip. And that sweet, sweet 2.375% mortgage...
  - lazide 4y ago
    It's a good place to be in! Pretty much only secondary to the folks who did it a couple cycles ago and paid everything off, and managed to not explode things/screw it up. Enjoy, and hopefully no one comes around to give you grief about it.
    - c0nsumer 4y ago
      Thank you! We're incredibly fortunate, and did everything fully permitted and whatnot to try and avoid all those wrinkles. Fingers crossed it all goes well.
c0nsumer 4y ago
There hasn't been enough time. Mortgage rates have only been high (-ish, not really that high historically) for a matter of months. Home sales are down quite a bit, so people are now sitting on houses that are priced at old prices, but are slow to sell because buyers consider it "too much". The sellers will be forced to cut prices to make sales, but that takes a while because it's emotional.
kapp_in_life 4y ago
I think partially because housing is inelastic, the demand outweighs the supply. People already in homes would rather not move than sell at a loss, especially those who have a low mortgage rate from the past few years locked in. New homes being built were delayed due to COVID(and now maybe due to interest rates?). So even with rising rates its moreso a matter of staying stagnant rather than rising more, at least up to a certain point. At least thats how I've read it explained.
czinck 4y ago
There's a lag in the index, but in August (most recent data available) housing prices were down 0.7% month over month, and 0.6% the month before https://www.fhfa.gov/AboutUs/Reports/Pages/US-House-Price-Index-October-2022.aspx https://www.fhfa.gov/AboutUs/Reports/Pages/US-House-Price-In.... But, as others have pointed out, housing prices are sticky for a variety of reasons.
Analemma_ 4y ago
Housing prices are very sticky in the downward direction. Sellers really hate taking a hit on their asking price, and they will just stay in the house rather than sell for a long time. It will take years of elevated interest rates before prices start to come down significantly.

whimsicalism 4y ago

Homeowners are just reluctant to lower, so they are happy to sit with fewer sales and higher prices. It will go down, it is just sticky because nobody wants to admit their home is worth less.

bredren 4y ago

Be more patient. Watch Canada and Australia.

Sin2x 4y ago

There is a lag.

gedy 4y ago

It just takes time. Even in 2008 prices took a few years to bottom out.

lazide 4y ago

It takes years for existing sellers to wake up to market shifts, unless they’re desperate is why. If it’s a nicer area, many can ride it out through an entire bust cycle. Most folks can get 30 yr fixed rates, so any area where most owners have stable employment and/or strong capital reserves, can cruise with zero movement for years if conditions aren’t favorable, barring estate sales, forced sales from divorces, etc.

c0nsumer 4y ago
Your second sentence is the position we're in. We were very fortunate to buy a house in a nice area a year ago. Right at the peak, but it was a fixer-upper from a friend, so we got a good deal and skipped a lot of fees/commissions. Even with what we've put in to fix it up, we should still be above water post-dip. And that sweet, sweet 2.375% mortgage...
- lazide 4y ago
  It's a good place to be in! Pretty much only secondary to the folks who did it a couple cycles ago and paid everything off, and managed to not explode things/screw it up. Enjoy, and hopefully no one comes around to give you grief about it.
  - c0nsumer 4y ago
    Thank you! We're incredibly fortunate, and did everything fully permitted and whatnot to try and avoid all those wrinkles. Fingers crossed it all goes well.

c0nsumer 4y ago

There hasn't been enough time. Mortgage rates have only been high (-ish, not really that high historically) for a matter of months. Home sales are down quite a bit, so people are now sitting on houses that are priced at old prices, but are slow to sell because buyers consider it "too much". The sellers will be forced to cut prices to make sales, but that takes a while because it's emotional.

kapp_in_life 4y ago

I think partially because housing is inelastic, the demand outweighs the supply. People already in homes would rather not move than sell at a loss, especially those who have a low mortgage rate from the past few years locked in. New homes being built were delayed due to COVID(and now maybe due to interest rates?). So even with rising rates its moreso a matter of staying stagnant rather than rising more, at least up to a certain point. At least thats how I've read it explained.

czinck 4y ago

There's a lag in the index, but in August (most recent data available) housing prices were down 0.7% month over month, and 0.6% the month before https://www.fhfa.gov/AboutUs/Reports/Pages/US-House-Price-Index-October-2022.aspx https://www.fhfa.gov/AboutUs/Reports/Pages/US-House-Price-In.... But, as others have pointed out, housing prices are sticky for a variety of reasons.

Analemma_ 4y ago

Housing prices are very sticky in the downward direction. Sellers really hate taking a hit on their asking price, and they will just stay in the house rather than sell for a long time. It will take years of elevated interest rates before prices start to come down significantly.