Are Home Prices Going to Crash? Here’s What You Need to Know

If you’ve been waiting to buy a home and hoping for prices to drop, you might be wondering if a market crash is on the horizon. The truth? Experts agree that a significant price drop isn’t likely. Let’s explore why that’s the case and what it means for you.

Supply and Demand Drive Home Prices

Like any other market, the housing market follows the basic principles of supply and demand. When more people want to buy homes than there are homes available, prices go up.
Right now, the U.S. is experiencing a housing shortage of several million homes. This gap between buyer demand and the available supply is the key reason why home prices aren’t expected to fall nationwide. As David Childers, President of Keeping Current Matters (KCM), explains:
“The main driving force on pricing is the limited amount of inventory in most markets across the country. That issue is not going to be solved overnight or in the next twelve months.”

How Did We Get Here?

The housing shortage didn’t happen overnight. For over 15 years, homebuilders haven’t been constructing enough homes to meet growing demand. After the 2008 housing crisis, construction slowed dramatically, and only recently have builders started to ramp back up.
Take a look at the graph below, which highlights how new construction levels have lagged for years. Even though homebuilding has been increasing in recent years, it’s still not enough to catch up. According to AmericanProgress.org, builders are struggling to meet current demand, let alone make up for years of underbuilding.

However, it’s important to remember that real estate is local. National trends might not fully reflect what’s happening in your area. If your local market has a larger supply of homes, prices might grow more slowly or even decline slightly. On the other hand, areas with tight inventory are likely to see prices climb.
This is why it’s essential to work with a local mortgage expert who understands your market and can guide you through the current conditions.

Bottom Line

The future of home prices comes down to supply and demand. With inventory still limited in most markets, significant price drops aren’t expected. If you’re curious about what’s happening in your area, let’s connect. Together, we can review your local market and create a plan tailored to your needs. Whether you’re buying or selling, having the right information will help you make confident decisions.

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