When Will Home Prices Finally Come Down?

Housing Affordability

U.S. home affordability has hit record lows. Home prices are at record highs, and while mortgage rates have come down from their highs (and are expected to come down further), many prospective homebuyers feel shut out of the market.

So when will the market finally turn?

Light at the End of a Long Tunnel

If you ask analysts at Goldman Sachs, it will be “a five-year odyssey of slow normalization.” Oof. If you’re in the market now, this may feel like a long time away. So why will it take so long?

The answer to this includes a closer look at the U.S. housing market, which has been structurally undersupplied for years. That means that there are fewer houses for sale than buyers in the market.

There are multiple reasons for that. For one, fewer homes are being built on the whole (costs have a role to play here), and second, existing homeowners who could downsize are hesitant to do so given the high interest rate environment. Getting out of one mortgage could mean getting into one with a higher rate to live in a smaller place.

Over time, as mortgage rates come down further and homes are being built, the demand-supply equilibrium in the housing market should come back into balance again. It just won’t be a quick process.

Disclaimer
SoFi Securities (Hong Kong) Limited and its affiliates (SoFi HK) may post or share information and materials from time to time. They should not be regarded as an offer, solicitation, invitation, investment advice, recommendation to buy, sell or otherwise deal with any investment instrument or product in any jurisdictions. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.

SoFi HK does not make any warranties about the completeness, reliability and accuracy of this information and will not be liable for any losses and/or damages in connection with the use of this information.

The information and materials may contain hyperlinks to other websites, we are not responsible for the content of any linked sites. The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi HK. These links are provided for informational purposes and should not be viewed as an endorsement. The risk involved in using such hyperlinks shall be borne by the visitor and subject to any Terms of Use applicable to such access and use.

Any product, logos, brands, and other trademarks or images featured are the property of their respective trademark holders. These trademark holders are not affiliated with SoFi HK or its Affiliates. These trademark holders do not sponsor or endorse SoFi HK or any of its articles.

Without prior written approval of SoFi HK, the information/materials shall not be amended, duplicated, photocopied, transmitted, circulated, distributed or published in any manner, or be used for commercial or public purposes.