5 ms·

But will lower demand coupled with still high interest rates actually lead to reduced housing prices?

by mcdonje 11mo ago

etchalon 11mo ago
It has in several cities, including Austin, where I live.
- ortusdux 11mo ago
  Zillow publishes some interesting data: https://www.zillow.com/home-values/10221/austin-tx/ https://www.zillow.com/home-values/10221/austin-tx/ https://www.zillow.com/home-values/102001/united-states/ https://www.zillow.com/home-values/102001/united-states/
  - Workaccount2 11mo ago
    What's fascinating to see is that around me the wealthy towns are seeing 6-7% annual appreciation whereas the lower middle class towns are in the 2-3% range. K-shaped economy and all that I suppose.
    - taeric 11mo ago
      Ish? Look into towns that didn't have a high reliance on tech. In particular, look for ones that didn't ride the rollercoaster of really high wages that a lot of tech drove and is now flattening off. Looks like shipping is also an industry that you probably don't want to track on this search. Other than that, places that saw modest wage growth saw similarly modest housing cost growth. And haven't seen it fall back, yet.
- TrainedMonkey 11mo ago
  I feel like 50% of that is explained by the luxury housing build out bubble in Austin specifically.
  - etchalon 11mo ago
    We just overbuilt everything. Condos, houses, etc. There's a lot of inventory no matter what type of housing you're looking for.
    - cantaloupe 11mo ago
      The academic consensus is that there is a housing shortage, not a surplus. Perhaps there is a local surplus in undesirable areas, but that isn’t true in cities or nationally. https://www.brookings.edu/articles/make-it-count-measuring-our-housing-supply-shortage/ https://www.brookings.edu/articles/make-it-count-measuring-o...
      - nemomarx 11mo ago
        Austin and Texas in general have less housing restrictions than other places wrt zoning and regulation, so they could plausibly have a surplus. You can only really speak locally about any of this because location determines the market
    - qball 11mo ago
      No, you just happened to build appropriately because a certain subfaction of the population weren't able to pass the typical laws that would stop building. The housing shortage was created by regulation and it's foolish or selfish to pretend otherwise. Austin is unique in that most of the harmful self-serving conservatism-as-in-block-and-deny-all-development that city people usually to do is constrained by the rest of the state, and as an obvious result arguably has the highest standard of living in the entire world.
      - awesome_dude 11mo ago
        kind of.. and kind of not regulation /tends/ to be introduced because builders are misbehaving (bad materials, bad workmanship, building in flood zones, etc), but the bigger problem is NIMBY who then use those laws to prevent other people building in "their" neighbourhood
- burnt-resistor 11mo ago
  Moved out of ATX to somewhere around hill country last year. There were just too many boring, uncool, rich bozos moving in, and I couldn't take it anymore.
dr_kretyn 11mo ago
Talking from the Vancouver perspective where we have a similar situation - yes, house prices are going down. People list houses with the same price as 3-4 years ago but most close below the asking price.
ekjhgkejhgk 11mo ago
> But will lower demand coupled with still high interest rates actually lead to reduced housing prices? One theory says that either lower employement causes lower demand and therefore lower interest rates OR lower employement causes the FED to lower interest rates to stimulate spending, and in EITHER case the response to your premise of "low employement + high interest rates" should be "interest rates will come down", and separately "low employment implies low demand implies house prices will come down".
bluGill 11mo ago
Somewhat, but remember that house prices are sticky. If I can't sell my house and get into one with a similar value (both price and features) with near net zero change in my debt and payments I'm likely to stay put. Of course once I decide to move I'll be looking at cheaper and more expensive places, but if I can't break even on a like for like move why would I move? I'll just ride this market out for another 10 years. (note too that my mortgage is less than 3% - one more reason moving anytime soon would be a terrible thing for my life) If my house is worth less than what I owe then moving (selling short) can make sense. Houses are not just an investment for most people. There are investment factors, but they are also the place you live. Thus most people cannot just sell or not - they also have to consider where will they live next if they sell. Even if I knew exactly where the bottom would be odds are I'd still not sell because I don't have options to live elsewhere.
- toomuchtodo 11mo ago
  ~4M homes transacted in 2025. Price levels will decline over time, it's just who has to sell first. Life/forced sales (divorce, death, relo, downsize for costs, etc) are up first vs irrational sellers pining for historical price levels. Foreclosures are rising (especially in Florida, taxes and insurance going up), but not materially imho (yet? tbd based on how the economy holds up, all real estate is local). Delistings Jump 28% as Sellers Pull Homes Off Market Rather Than Settle For Low Prices - https://www.redfin.com/news/delistings-jump-sellers-pull-homes-off-market/ https://www.redfin.com/news/delistings-jump-sellers-pull-hom... - November 25th, 2025 Foreclosures Rise for 8th Straight Month—These States Have the Worst Rates - https://www.realtor.com/news/trends/foreclosure-increase-attom-research-october-2025/ https://www.realtor.com/news/trends/foreclosure-increase-att... - November 14th, 2025 Pending Home Sales Slip As Would-Be Buyers Wait For Lower Rates and Economic Clarity - https://www.redfin.com/news/housing-market-update-pending-sales-decline-buyers-waiting-for-lower-rates/ https://www.redfin.com/news/housing-market-update-pending-sa... - November 13th, 2025 (real estate market participant)
  - bluGill 11mo ago
    Of course there are always people who need to sell for whatever reason. There are a large number of people not in the market who otherwise would be, but that doesn't mean nobody is in the market.
francisofascii 11mo ago
There is also "Return to Office" polices that may be buoying housing prices near the urban core.
duped 11mo ago
I'm seeing homes in my neighborhood sit on the market for 3-4 months before dropping prices and finally selling, about 20-25% off the original listing.
- burnt-resistor 11mo ago
  Houses here are sitting on and off for 6 months at a time without closing. The market has all of the energy of a banana slug.
matsemann 11mo ago
What we've seen in Oslo, Norway, is mostly that the market slows down. Those that get lower offers than what it previously was "worth" don't sell. So in the prices graphs it's mostly flat, but then with lower sales total. So it kinda "hides" that things are worth less as it's no transaction. And people don't dare buying before selling, so lead times are quite long. And then they stop building new stuff while prices are low, so demand will keep prices stable, and when the interest gets lower again prices will probably skyrocket since it's not been built enough in the meantime.
burnt-resistor 11mo ago
For more competitive markets, it seems to largely depend on if foreign and out-of-state rich buyers are still interested in buying in an area. The fairly-to-ultra-rich ~5% are driving prices and demand of almost everything in these times.
carlosjobim 11mo ago
Real estate owners will rather let their buildings rot to zero value than reduce their prices. They have juicy government bailouts coming, and social security and pensions to pay for their upkeep. They don't need the money. It was just an investment to get rich without having to do anything, and if it doesn't work, they'll let it rot because they deserve their massive return god damn it!

But will lower demand coupled with still high interest rates actually lead to reduced housing prices?

by mcdonje 11mo ago

But will lower demand coupled with still high interest rates actually lead to reduced housing prices?

etchalon 11mo ago

It has in several cities, including Austin, where I live.

ortusdux 11mo ago
Zillow publishes some interesting data: https://www.zillow.com/home-values/10221/austin-tx/ https://www.zillow.com/home-values/10221/austin-tx/ https://www.zillow.com/home-values/102001/united-states/ https://www.zillow.com/home-values/102001/united-states/
- Workaccount2 11mo ago
  What's fascinating to see is that around me the wealthy towns are seeing 6-7% annual appreciation whereas the lower middle class towns are in the 2-3% range. K-shaped economy and all that I suppose.
  - taeric 11mo ago
    Ish? Look into towns that didn't have a high reliance on tech. In particular, look for ones that didn't ride the rollercoaster of really high wages that a lot of tech drove and is now flattening off. Looks like shipping is also an industry that you probably don't want to track on this search. Other than that, places that saw modest wage growth saw similarly modest housing cost growth. And haven't seen it fall back, yet.
TrainedMonkey 11mo ago
I feel like 50% of that is explained by the luxury housing build out bubble in Austin specifically.
- etchalon 11mo ago
  We just overbuilt everything. Condos, houses, etc. There's a lot of inventory no matter what type of housing you're looking for.
  - cantaloupe 11mo ago
    The academic consensus is that there is a housing shortage, not a surplus. Perhaps there is a local surplus in undesirable areas, but that isn’t true in cities or nationally. https://www.brookings.edu/articles/make-it-count-measuring-our-housing-supply-shortage/ https://www.brookings.edu/articles/make-it-count-measuring-o...
    - nemomarx 11mo ago
      Austin and Texas in general have less housing restrictions than other places wrt zoning and regulation, so they could plausibly have a surplus. You can only really speak locally about any of this because location determines the market
  - qball 11mo ago
    No, you just happened to build appropriately because a certain subfaction of the population weren't able to pass the typical laws that would stop building. The housing shortage was created by regulation and it's foolish or selfish to pretend otherwise. Austin is unique in that most of the harmful self-serving conservatism-as-in-block-and-deny-all-development that city people usually to do is constrained by the rest of the state, and as an obvious result arguably has the highest standard of living in the entire world.
    - awesome_dude 11mo ago
      kind of.. and kind of not regulation /tends/ to be introduced because builders are misbehaving (bad materials, bad workmanship, building in flood zones, etc), but the bigger problem is NIMBY who then use those laws to prevent other people building in "their" neighbourhood
burnt-resistor 11mo ago
Moved out of ATX to somewhere around hill country last year. There were just too many boring, uncool, rich bozos moving in, and I couldn't take it anymore.

dr_kretyn 11mo ago

Talking from the Vancouver perspective where we have a similar situation - yes, house prices are going down. People list houses with the same price as 3-4 years ago but most close below the asking price.

ekjhgkejhgk 11mo ago

> But will lower demand coupled with still high interest rates actually lead to reduced housing prices? One theory says that either lower employement causes lower demand and therefore lower interest rates OR lower employement causes the FED to lower interest rates to stimulate spending, and in EITHER case the response to your premise of "low employement + high interest rates" should be "interest rates will come down", and separately "low employment implies low demand implies house prices will come down".

bluGill 11mo ago

Somewhat, but remember that house prices are sticky. If I can't sell my house and get into one with a similar value (both price and features) with near net zero change in my debt and payments I'm likely to stay put. Of course once I decide to move I'll be looking at cheaper and more expensive places, but if I can't break even on a like for like move why would I move? I'll just ride this market out for another 10 years. (note too that my mortgage is less than 3% - one more reason moving anytime soon would be a terrible thing for my life) If my house is worth less than what I owe then moving (selling short) can make sense. Houses are not just an investment for most people. There are investment factors, but they are also the place you live. Thus most people cannot just sell or not - they also have to consider where will they live next if they sell. Even if I knew exactly where the bottom would be odds are I'd still not sell because I don't have options to live elsewhere.

toomuchtodo 11mo ago
~4M homes transacted in 2025. Price levels will decline over time, it's just who has to sell first. Life/forced sales (divorce, death, relo, downsize for costs, etc) are up first vs irrational sellers pining for historical price levels. Foreclosures are rising (especially in Florida, taxes and insurance going up), but not materially imho (yet? tbd based on how the economy holds up, all real estate is local). Delistings Jump 28% as Sellers Pull Homes Off Market Rather Than Settle For Low Prices - https://www.redfin.com/news/delistings-jump-sellers-pull-homes-off-market/ https://www.redfin.com/news/delistings-jump-sellers-pull-hom... - November 25th, 2025 Foreclosures Rise for 8th Straight Month—These States Have the Worst Rates - https://www.realtor.com/news/trends/foreclosure-increase-attom-research-october-2025/ https://www.realtor.com/news/trends/foreclosure-increase-att... - November 14th, 2025 Pending Home Sales Slip As Would-Be Buyers Wait For Lower Rates and Economic Clarity - https://www.redfin.com/news/housing-market-update-pending-sales-decline-buyers-waiting-for-lower-rates/ https://www.redfin.com/news/housing-market-update-pending-sa... - November 13th, 2025 (real estate market participant)
- bluGill 11mo ago
  Of course there are always people who need to sell for whatever reason. There are a large number of people not in the market who otherwise would be, but that doesn't mean nobody is in the market.

francisofascii 11mo ago

There is also "Return to Office" polices that may be buoying housing prices near the urban core.

duped 11mo ago

I'm seeing homes in my neighborhood sit on the market for 3-4 months before dropping prices and finally selling, about 20-25% off the original listing.

burnt-resistor 11mo ago
Houses here are sitting on and off for 6 months at a time without closing. The market has all of the energy of a banana slug.

matsemann 11mo ago

What we've seen in Oslo, Norway, is mostly that the market slows down. Those that get lower offers than what it previously was "worth" don't sell. So in the prices graphs it's mostly flat, but then with lower sales total. So it kinda "hides" that things are worth less as it's no transaction. And people don't dare buying before selling, so lead times are quite long. And then they stop building new stuff while prices are low, so demand will keep prices stable, and when the interest gets lower again prices will probably skyrocket since it's not been built enough in the meantime.

burnt-resistor 11mo ago

For more competitive markets, it seems to largely depend on if foreign and out-of-state rich buyers are still interested in buying in an area. The fairly-to-ultra-rich ~5% are driving prices and demand of almost everything in these times.

carlosjobim 11mo ago

Real estate owners will rather let their buildings rot to zero value than reduce their prices. They have juicy government bailouts coming, and social security and pensions to pay for their upkeep. They don't need the money. It was just an investment to get rich without having to do anything, and if it doesn't work, they'll let it rot because they deserve their massive return god damn it!