Your Home Sold Guaranteed Realty — The Nathan Clark Team

How Will Falling Home Prices Affect the U.S. Housing Market?

The Effects of Falling Home Prices For Home Buyers and Sellers

Worried about falling home prices and what effects they might have on the purchase or sale of your home? Falling prices are impacting the entire country, putting both home buyers and sellers on edge. 

While housing prices have been steadily falling since interest rates were first raised in March 2022, the real estate market is feeling renewed concern as inflation continues to rise and a recession looms ahead.

If you’re planning on buying or selling a home, you need to pay attention to the housing market now more than ever. Our team at Your Home Sold Guaranteed Realty – The Nathan Clark Team will break down what you need to know about falling home prices. We’ll also go over what we can do to help you if you’re currently looking to buy or sell a home in Rhode Island.

Why Are Home Prices Falling?

What’s causing home prices to drop? Many people are worried about the impacts of a recession on the housing market and home prices. 

According to some economic experts, the U.S. has already entered a recession after it experienced two quarters of economic growth by the summer of 2022. However, others say we haven’t quite reached a recession yet– though we may be heading towards one in the near future.

But the reality is that housing prices will likely continue to fall with or without a recession, though a recession will worsen the situation. 

At the moment, the cooling of the housing market nationwide is primarily due to rising interest rates. Interest rates have been raised several times since 2022 to combat inflation. 

By September 2022, the interest rates on a 30-year fixed-rate loan went up to 6.7 percent, representing a nearly four percent increase from the same point a year ago. As a result, monthly mortgage payments are now 74% more expensive than a year ago.

In addition, the Fed may continue to raise interest rates through 2023, depending on the course inflation takes.

How Will Falling Home Prices Affect the U.S. Housing Market?

How Much Are Home Prices Falling?

So, how much are home prices falling? Is the situation really as bad as experts claim it is? There is certainly reason to be concerned about falling home prices and what they mean for the state of the national housing market.

By August 2022, the average national median list price fell by $14,000– to a total of $435,000. Some economic experts predict that home prices may fall by as much as 10 to 20 percent over the next couple of years. 

Of course, the amount that prices drop will depend on your area and what prices were like before interest rates impacted them. 

But many home sellers are already cutting back on their prices to get their homes sold faster. According to Realtor.com, 19.5 percent of home sellers are cutting their prices to stay competitive against rising interest rates.

How Do Falling Prices Affect Home Buyers?

Falling prices might sound like a better deal for home buyers. However, that isn’t the case. Lower home prices are offset by higher mortgage rates, meaning home buyers are paying the same, if not more, than they used to before rates went up.

Another side effect of falling prices is that more homes are on the market. But this isn’t because more homes are being listed. 

Instead, homes are having a harder time selling, meaning they’re staying on the market for longer periods of time. This is good news for home buyers who can afford a home despite the higher interest rates. 

But it also means that the supply of new homes is actually falling, which is bad for home buyers planning to buy in the future.

How Do Falling Prices Affect Home Sellers?

Falling prices are also negatively impacting home sellers. High interest rates mean that home sellers have to lower the prices of their homes in order to stay affordable to the majority of buyers. As a result, home sellers don’t make as much from selling their homes as they otherwise would have.

On top of that, many sellers may struggle to find interested buyers in the first place. This is because high interest rates make homes more difficult for buyers to afford, which ends up discouraging them from making a purchase. As a result, this leaves sellers’ homes on the market for longer periods of time. 

This is bad news for home sellers who need to sell their homes quickly or within a certain time frame.

We Can Help You Handle Falling Home Prices

So, what can you do to protect yourself from falling home prices? During turbulent housing market conditions, it’s more important than ever to work with an experienced realtor who can help you navigate the market, whether you’re buying or selling.

Rising interest rates mean it’s crucial to pay attention to housing prices in your area and adjust your expectations accordingly. With a skilled realtor, it’s possible to still get a reasonable yet competitive price when selling or buying a home.

At Your Home Sold Guaranteed Realty – The Nathan Clark Team, we have the ability to help you buy or sell a home in Rhode Island. Our team offers several unique buyer’s and seller’s guarantees that can keep you safe from falling home prices and ensure you come away with the most amount of money possible.

This includes our “Buy it Back” Guarantee, which ensures your home will sell for your desired price and timeframe– otherwise, we’ll buy it ourselves.

To learn more about our guarantees and what it’s like working with us, give us a call at 401-288-3557 or fill out the form below for more information.

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