I don’t think folks are taking an honest look at the fundamentals at play in the market:
Interest rates - money costs more, so folks have to buy less house. 200k @ 5.75 is 1167/mo, at 7.00 it’s 1330. 175k costs you 1167/mo now.
Property taxes got out of whack the past few years. Everyone was “making money” with their equity, right? My property taxes in Milwaukee, WI doubled in 5 years — yet I couldn’t find the withdrawal slot on my “money-making” home.
For the sake of simplicity, let’s call it a bump from 250/mo for taxes up to 350/mo.
Using the example above, the $267 a month lost to tax and interest increases equates to $45k in spending power at the old rate of 5.75% on a fixed 30-year.
I’m not sure how anyone thinks that this reality can be overcome by glossing over the facts in news articles. The market crash has nothing to do with homes and everything to do with external factors that halted the market dead in its tracks. Given this folks have only two options - hold the house they own or sell it at a reduced price that takes into account buyer’s reduced spending power. Sure its nice when your home is “going up,” but IMO, the homevestment hype was little more than bluster. Now folks are leveraged in debt against their homes with no way out - buyers aren’t necessarily being scared away by a lack of desire, it’s the sucking sound of spending power leaving them at a rapid pace.
And they say there’s no inflation...
Our system here is skewed because of “home sales”. The value of MY property is dependent on what the guy down the street SOLD his home for, not on what I PAID for it............