House prices could decrease soon, economist says
SAGINAW, Mich. (WNEM) - After many have struggled with the competitive housing market, real estate experts say hopeful homeowners could soon have a sigh of relief.
Experts believe within the next few months, we could shift from a seller’s market to a buyer’s market.
“The average price of a home has gone from 375,000 in June of 2020 to 525,000 in June of 2022,” said Tim Nash, economist at Northwood University.
That price increase is why Nash says a price correction is on the horizon.
According to a report by Moody Analytics, two-thirds of the nation’s largest housing markets are overvalued.
With inflation up and pay rates down, homes aren’t selling like they initially were post-pandemic.
“People just can’t buy homes,” Nash said. “They can’t afford it with that scenario, that three-pun scenario of lower real wages, higher interest rates, and higher prices. So we think that prices are going to decline, sales are going to decline by the end of the year.”
Some economists have referred to the decline in home sales as a housing recession.
Dr. Spenser Robinson, Director of Real Estate at Central Michigan University, said that the government will have to step in to prevent the market from crashing.
“Market forces can be influenced by government policies,” Robinson said. “So, what I would expect, government policy to shift at some point in the non-distant future towards making sure we keep interest rates at stable level so there isn’t a crash or a really strong downward trend in home prices.”
Robinson tells why the drop is happening now.
“We saw growth that was more than normal over the last few years,” Robinson said. “The reasons for that were increase in demands for housing in the pandemic because people wanted larger places to live, as there’s a lot of work from home and will continue to be. And then the federal reserve printed $4 trillion of money. So some of this decline is just retreating back to where things really out to be in their more natural, intrinsic price.”
Experts say for those looking to buy sooner rather than a later, the best time will be between the end of this year and early next year.
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