Last week I asked all of you: Will house prices defy the odds and actually increase? The real estate pros have spoken, the majority think (600%) think that real estate prices will fall, while 20% felt no impact on prices and 20% think that real estate prices will increase. Why are these results surprising?
What happens to real estate prices?
I thought the survey results were interesting with the majority of respondents 60% feeling that prices would fall while 20% so prices flat and 20% prices rising. I’m in agreement that in the short term prices likely will fall as the market adjusts, but the structural changes in housing will ultimately lead to an increase in prices as new supply is severely reduced
Key comments on how rates impact real estate prices
In the comments there primary theme was that rates are increasing inventory and ultimately prices will have to adjust. Below are some of the best comments:
- inventory up, mortgage rates up, demand down, hence prices down. The seller is denial is finally capitulating in more and more of the country
- Mortgage rates affect payments, payments affect affordability. As the pool of qualified buyers decline, relative to price, the supply of home’s will increase relative to qualified demand. This over supply can only be corrected by 1: a more affordable purchase option (lower rate or longer term) or 2: lower price (therefore lower payment, therefore more qualified buyers).
- Prices will rise due to housing demand being higher than housing supply.
Key insights on what happens to real estate prices
The survey respondents quickly keyed into the underlying issue we are currently facing which is high rates are making houses less affordable. Higher rates will ultimately lead to a decline in values on the residential and especially the commercial side. The two questions we don’t know the answers to yet: 1) when will lower prices occur 2) how much will prices decline?
Unfortunately the answers to these two questions will depend on how inflation goes from here, the general economy, the election, etc… so we will need to stay tuned to get better information. On a side note, I believe that we will see a reset in prices, but our lack of building and all the governmental regulations increasing building costs will ultimately lead to higher prices in desirable areas. As always, thank you everyone for your participation in the survey and invaluable insights. I appreciate it 😊
Additional Reading/Resources:
- https://www.fairviewlending.com/will-house-prices-rise-and-defy-all-odds/
- https://www.fairviewlending.com/federal-reserve-raises-rates-yet-mortgage-rates-fall-why/
- https://www.fairviewlending.com/is-your-credit-score-useless/
- https://www.fairviewlending.com/interest-rates-jump-again-are-they-going-to-decline/
- https://www.fairviewlending.com/rates-make-a-u-turn-should-you-panic/
- https://www.fairviewlending.com/will-mortgage-rates-fall-in-2026/
- https://www.fairviewlending.com/where-should-you-invest-in-real-estate-in-2026/
- https://www.fairviewlending.com/fed-drops-rates-why-did-mortgage-rates-barely-budge/
- https://www.fairviewlending.com/phantom-debt-soars-what-does-this-mean-for-real-estate-2/
- https://www.fairviewlending.com/never-buy-a-residential-condo/
- https://www.fairviewlending.com/the-war-on-landlords/
- https://www.fairviewlending.com/house-prices-hit-another-record-should-you-even-care/
- https://www.fairviewlending.com/root-cause-of-real-estate-price-declines/
- https://www.fairviewlending.com/will-real-estate-fall-to-2020-values/
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Glen Weinberg personally writes these weekly real estate blogs based on his real estate experience as a lender and property owner. I’m not an armchair reporter/writer. We are an actual private lender, lending our own money. We service our own loans and own commercial and residential real estate throughout the country.
My day job is and continues to be private real estate lending/ hard money lending which enables me to have a unique perspective on the market. I don’t accept any paid sponsorships or ads on my blog to ensure accurate information. I’ve been writing this for almost 20 years and have over 30k subscribers. Please like and share my blogs on linkedin, twitter, facebook, and other social media and forward to your friends 😊. I would greatly appreciate it.
Fairview is a hard money lender specializing in private money loans / non-bank real estate loans in Georgia, Colorado, and Florida. We are recognized in the industry as the leader in hard money lending/ Private Lending with no upfront fees or any other games. We fund our own loans and provide honest answers quickly. Learn more about Hard Money Lending through our free Hard Money Guide. To get started on a loan all we need is our simple one page application (no upfront fees or other games).
Written by Glen Weinberg, COO/ VP Fairview Commercial Lending. Glen has been published as an expert in hard money lending, real estate valuation, financing, and various other real estate topics in Bloomberg, Businessweek ,the Colorado Real Estate Journal, National Association of Realtors Magazine, The Real Deal real estate news, the CO Biz Magazine, The Denver Post, The Scotsman mortgage broker guide, Mortgage Professional America and various other national publications.
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