Waiting for a Housing Crash? Here's What Experts Are Predicting

There’s been plenty of talk about whether home prices are going to fall. Some buyers are worried about buying before a housing crash, while others are waiting and hoping prices come down enough to make buying more affordable.

So, what are housing experts actually predicting?

Experts Aren’t Forecasting a Housing Crash

Each quarter, Fannie Mae surveys more than 100 housing experts about where they believe home prices are headed. Their latest forecast shows home prices continuing to rise every year through at least 2030.

On average, the experts predict home prices will increase 14.7% over the next five years. Even the more pessimistic experts in the survey still expect prices to rise about 6.6% by the end of 2030.

The forecasts vary on how much prices will appreciate, but the overall expectation remains the same: home prices are expected to grow, not crash.

Home Price Growth Is Slowing

This doesn’t mean we should expect the rapid price increases we saw a few years ago. In fact, forecasts for several of the coming years have been adjusted down slightly.

That can actually be a healthy change for the housing market. Slower appreciation gives incomes and affordability more time to catch up while homeowners can continue building equity. And remember, these are national forecasts. Real estate is local, and home values can vary considerably by city, neighborhood and even price range. What happens nationally may look different here in the Twin Cities.

What Does This Mean if You’re Thinking About Buying?

If you’re waiting for home prices to drop significantly before buying, it’s worth considering what could happen if the experts are right.

A home that costs $400,000 today could be worth about $458,000 in five years based on the average forecast. That’s approximately $58,000 in potential appreciation.

Of course, appreciation is never guaranteed. Interest rates, inventory, the economy and local market conditions all play a role. The bigger point is that waiting for a major price drop has its own risks if prices continue to gradually rise.

And What About Current Homeowners?

Continued appreciation can also be good news if you already own a home. Many homeowners have built substantial equity over the past several years, and even moderate price growth could add to that equity.

If you’ve been considering selling, downsizing or moving up, understanding how much equity you have may be more important than trying to predict the perfect time to make a move.

What’s Happening in Your Market?

National forecasts are helpful for understanding the bigger picture, but your decision should be based on your own home, finances and local market.

If you’re curious about what your home may be worth or whether buying or selling makes sense right now, the Sandy Erickson Real Estate Team would be happy to help you look at the numbers and your options. Sometimes having the facts makes the next step much clearer.