[sgc]

Rents have gone up, and people have locked in historically low interest rates. Very few people actually have to sell, and outside of limited life situations, many will just shift to renting. That is why it is taking so long for prices to drop, and why they very well might never drop enough to match previous affordability before we hit a period of declining rates. If only 10% of owners on the market are actually feeling any financial pain, it is not enough to move the needle on the market price.

[friedman23]

All those people that retired with their nice homes because of historically high asset prices that lost close to 50% of their net worth in the past year or two might need to consider downsizing. Especially once property taxes on their newly inflated home values kick in.

[toomuchtodo]

We can speculate, but will have to see what job losses look like over the next 12-18 months, Boomers (10k per day retire) trying to downsize or tap their equity to support themselves in retirement, etc before boldly proclaiming sales with seize up as rates climb. Life happens, some people will need to sell, even if that means losing their sweet 2-3% rate. Cash buyers know what these assets are worth at these interest rates, it’s unlikely they’re going to Wile E Coyote over the cliff because mortgage buyers stopped at the edge.

[sgc]

We are in the middle of it. Rates have been going up for a long time, and around here, year over year sales are down 40%. Prices are flat or have taken a very small dip, depending on the submarket. I am not at all convinced this trend will continue beyond a 10-20% drop in prices, nowhere near the 35-50% drop required to reach purchasing power parity depending on where the Fed stops raising rates. A slow, smaller drop is functionally equivalent to prices continuing to go up for many as they have been for so long, but then also gets a certain group of cash buyers who aren't looking for an absolute killing, just good returns, back into the market to slow down further drops.

Of course we don't know the future, and if things really go to the worst due to wars around the world etc, all bets are off. But my opinion is based on things continuing more or less in the current mediocrity for a while, rather than getting significantly worse.