{"id":183645,"date":"2025-07-02T12:54:06","date_gmt":"2025-07-02T18:54:06","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=183645"},"modified":"2025-07-02T12:54:09","modified_gmt":"2025-07-02T18:54:09","slug":"have-we-started-on-the-slippery-slope-to-a-housing-crash","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/have-we-started-on-the-slippery-slope-to-a-housing-crash","title":{"rendered":"Have We Started Down the Slippery Slope to a Housing Crash?"},"content":{"rendered":"\n<p><span data-preserver-spaces=\"true\">The times, they are a-changin&#8217;. The mercurial real estate market now has more sellers than buyers, as <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.redfin.com\/news\/home-prices-cool-still-at-record-may-high\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Redfin<\/span><\/a><span data-preserver-spaces=\"true\"> reports that sluggish home prices have grown at their slowest pace in two years, active listings have hit a five-year high, and existing home sales have hit a seven-month low.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">We&#8217;re a long way from the double-digit yearly price increases experienced after the end of the pandemic. According to Redfin&#8217;s data, median home sale prices increased a meager 0.7% nationally year over year in May\u2014the slowest growth in two years.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">However, house prices are still out of reach for many. May&#8217;s median sales price of $440,997 was the highest of any May in 13 years. <\/span><span data-preserver-spaces=\"true\">However, those <\/span><span data-preserver-spaces=\"true\">stats<\/span><span data-preserver-spaces=\"true\"> might not hold up for long, as certain sections of the country have already seen prices begin to <\/span><span data-preserver-spaces=\"true\">tumble<\/span><span data-preserver-spaces=\"true\">, with major cities in California and the Sunbelt experiencing <\/span><span data-preserver-spaces=\"true\">declines<\/span><span data-preserver-spaces=\"true\">, and<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.redfin.com\/news\/home-price-forecast-decline-2025\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\"> more <\/span><span data-preserver-spaces=\"true\">are expected<\/span><span data-preserver-spaces=\"true\"> to follow suit<\/span><\/a><span data-preserver-spaces=\"true\"> should interest rates remain high.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">&#8220;The market has been shifting in buyers&#8217; favor, but it doesn&#8217;t feel that way to many Americans, because homebuying costs remain near record highs,&#8221; said Redfin senior economist<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.redfin.com\/news\/author\/asad-khan\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\"> Asad Khan<\/span><\/a><span data-preserver-spaces=\"true\"> in the Redfin press release. &#8220;Buyers may gain more negotiating power in the coming months as more sellers face a tough reality: Sellers no longer hold all the cards.&#8221;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Fewer Offers Are Over Asking Price<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">In an indication of how things have changed since the Federal Reserve raised rates and kept them elevated amid stubborn inflation, offers over asking price are now relatively rare, with under a third<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.redfin.com\/news\/housing-market-update-fewer-homes-selling-above-asking-price\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\"> (28%)<\/span><\/a><span data-preserver-spaces=\"true\"> falling into that category, a sharp decline from the same period in 2022 when over half of all sales<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.businesswire.com\/news\/home\/20250612733783\/en\/Redfin-Reports-Just-28-of-Homes-Are-Selling-Above-Asking-Price-The-Lowest-Springtime-Level-Since-2020\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\"> (53%)<\/span><\/a><span data-preserver-spaces=\"true\"> went for over asking.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">For sellers, Redfin agents offered some poignant advice: Price realistically, be willing to negotiate, and present your homes in the best possible condition.&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">With Fewer New Homes for Sale, Existing Listings Linger<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">New listings are down 2.9% <\/span><span data-preserver-spaces=\"true\">month over month<\/span><span data-preserver-spaces=\"true\"> as sellers put the brakes on in light of the market slowdown. Active listings increased, however, as existing houses for sale failed to find buyers.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Said<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.redfin.com\/real-estate-agents\/rob-wittman\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\"> Rob Wittman<\/span><\/a><span data-preserver-spaces=\"true\">, a Redfin Premier real estate agent in the Washington, D.C. area, in the Redfin press release:<\/span><\/p>\n\n\n\n<p><em><span data-preserver-spaces=\"true\">&#8220;We&#8217;ve hit a plateau with home prices. <\/span><span data-preserver-spaces=\"true\">A lot of<\/span><span data-preserver-spaces=\"true\"> homeowners are considering renting their homes <\/span><span data-preserver-spaces=\"true\">out<\/span><span data-preserver-spaces=\"true\"> instead of selling.<\/span><span data-preserver-spaces=\"true\"> The buyers who come through on tour these days have little urgency. They&#8217;re often browsing instead of buying because they&#8217;re hoping mortgage rates will come down, even though that&#8217;s unlikely to happen soon.&#8221;<\/span><\/em><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">The Northeast Is Still a Hot Market<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">The country is still primarily comprised of regional markets. While prices are down or stagnant in parts of the Sunbelt, they are up in certain parts of the Northeast, fueled in part by low inventory. For example:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong><span data-preserver-spaces=\"true\">Philadelphia: <\/span><\/strong><span data-preserver-spaces=\"true\">10.9%<\/span><\/li>\n\n\n\n<li><strong><span data-preserver-spaces=\"true\">New Brunswick, New Jersey:<\/span><\/strong><span data-preserver-spaces=\"true\"> 8.4%<\/span><\/li>\n\n\n\n<li><strong><span data-preserver-spaces=\"true\">Providence, Rhode Island:<\/span><\/strong><span data-preserver-spaces=\"true\"> 7.7%<\/span><\/li>\n<\/ul>\n\n\n\n<p><span data-preserver-spaces=\"true\">In Newark, New Jersey, homes had a 69.1% chance of selling above list price\u2014the highest percentage in the nation. <\/span><span data-preserver-spaces=\"true\">On the other coast, demand <\/span><span data-preserver-spaces=\"true\">for housing<\/span><span data-preserver-spaces=\"true\"> from the tech industry has made California cities, San Jose (60%) and San Francisco (59.9%), the next most likely homes to sell above their list price.<\/span><span data-preserver-spaces=\"true\">&nbsp;&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Conversely, homes in Florida were least likely to sell above their list price in six of the 10 metros. <\/span><span data-preserver-spaces=\"true\">Only one market, Detroit, saw active listings <\/span><span data-preserver-spaces=\"true\">fall<\/span><span data-preserver-spaces=\"true\">, and that was <\/span><span data-preserver-spaces=\"true\">only<\/span><span data-preserver-spaces=\"true\"> by 0.2%.<\/span><span data-preserver-spaces=\"true\">&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">According to the<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.spglobal.com\/spdji\/en\/index-family\/indicators\/sp-corelogic-case-shiller\/sp-corelogic-case-shiller-composite\/#indices\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\"> S&amp;P CoreLogic Case-Shiller Index<\/span><\/a><span data-preserver-spaces=\"true\">, released on June 24, New York experienced the <\/span><span data-preserver-spaces=\"true\">largest<\/span><span data-preserver-spaces=\"true\"> price increase <\/span><span data-preserver-spaces=\"true\">annually<\/span><span data-preserver-spaces=\"true\">, at 7.9%, followed by Chicago at 6% and Detroit at 5.5%.<\/span><span data-preserver-spaces=\"true\">&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">&#8220;What&#8217;s particularly striking is how this cycle has reshuffled regional leadership\u2014markets that were pandemic darlings are now lagging, while historically steady performers in the Midwest and Northeast are setting the pace,&#8221; Nicholas Godec, head of fixed income at S&amp;P Dow Jones Indices,<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.cnbc.com\/2025\/06\/24\/home-price-hikes-are-slowing-more-than-expected-.html\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\"> said in a press release.<\/span><\/a><span data-preserver-spaces=\"true\"> &#8220;This rotation signals a maturing market <\/span><span data-preserver-spaces=\"true\">that&#8217;s increasingly driven<\/span><span data-preserver-spaces=\"true\"> by fundamentals rather than speculative fervor.&#8221;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">The Middle Class Has <\/span><span data-preserver-spaces=\"true\">Been Priced Out<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">Affordability amongst the middle class continues to plague the market, with interest rates and house prices out of reach for many buyers. According to an analysis by<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.realtor.com\/news\/trends\/housing-affordability-supply-report-nar\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\"> NAR and Realtor.com<\/span><\/a><span data-preserver-spaces=\"true\">, households generating $100,000 a year could only afford to buy 37% of the homes listed on the market in March. In 2019\u2014six short years ago\u2014those in this income class could have purchased 65% of the homes on the market.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">&#8220;With the interest rates, everyone&#8217;s looking for a deal,&#8221; Dana Hall-Bradley, a real estate agent in Celebration, Florida, told <\/span><em><a class=\"editor-rtfLink\" href=\"https:\/\/www.wsj.com\/economy\/housing\/home-sales-rose-in-may-but-housing-market-still-sluggish-83f89d58\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">The Wall Street Journal<\/span><\/a><\/em><span data-preserver-spaces=\"true\">. &#8220;The buyers are not making decisions as quickly as they were during the pandemic days.&#8221; <\/span><em><span data-preserver-spaces=\"true\">The Journa<\/span><\/em><span data-preserver-spaces=\"true\">l reported that one in four listings on Zillow got a price cut in May.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Despite the unaffordability, house prices have not decreased significantly. Instead, price growth has slowed to a snail&#8217;s pace. &#8220;Consumers are not getting into the market,&#8221; Lawrence Yun, NAR&#8217;s chief economist, told <\/span><em><span data-preserver-spaces=\"true\">The Journal<\/span><\/em><span data-preserver-spaces=\"true\">. &#8220;I would attribute that to the affordability challenges.&#8221;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">These challenges have <\/span><span data-preserver-spaces=\"true\">resulted in<\/span><span data-preserver-spaces=\"true\"> a gradual accumulation of inventory, with the market now experiencing <\/span><span data-preserver-spaces=\"true\">more<\/span><span data-preserver-spaces=\"true\"> sellers <\/span><span data-preserver-spaces=\"true\">than<\/span><span data-preserver-spaces=\"true\"> buyers in many parts of the country.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">&#8220;Shoppers see more homes for sale today than one year ago, and encouragingly, many of these homes have <\/span><span data-preserver-spaces=\"true\">been added<\/span><span data-preserver-spaces=\"true\"> at moderate-income price points,&#8221; Realtor.com chief economist Danielle Hale <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.nar.realtor\/newsroom\/americas-housing-affordability-gap-persists-households-earning-75000-annually-can-afford-less-than-a-quarter-of-for-sale-home-listings\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">said in a press release<\/span><\/a><span data-preserver-spaces=\"true\">. &#8220;We still don&#8217;t have an abundance of homes that are affordable to low- and moderate-income households, and the progress that we&#8217;ve seen is not happening everywhere. It&#8217;s <\/span><span data-preserver-spaces=\"true\">been concentrated<\/span><span data-preserver-spaces=\"true\"> in the Midwest and the South.&#8221;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Final Thoughts: Practical Moves for Investors<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">As inventory begins to accumulate, inevitably, prices will eventually come down. Until that happens, unless buyers can negotiate a deal at a deep discount, it&#8217;s better to wait a few months to see how substantial the price drop will be by the end of the year, as well as what moves the Fed might make regarding interest rates.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">For landlords, running <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/rental-property-cash-flow-analysis\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">cash flow<\/span><\/a><span data-preserver-spaces=\"true\"> numbers at the current interest rates will give you an indication of whether you should buy or not. Cash flow will not be positive unless you are prepared to make a <\/span><span data-preserver-spaces=\"true\">large<\/span><span data-preserver-spaces=\"true\"> down payment.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">For <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/guides\/how-to-flip-houses\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">flippers<\/span><\/a><span data-preserver-spaces=\"true\">, projecting potential profit based on your after-repair value (<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/estimate-arv\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">ARV<\/span><\/a><span data-preserver-spaces=\"true\">) is a market-to-market proposition. If you&#8217;re in some areas of the Northeast, it&#8217;s still possible to eke out a living from flipping homes. Finding them, however, is likely to be a more difficult proposition.<\/span><\/p>\n\n\n","protected":false},"excerpt":{"rendered":"<p>The times, they are a-changin&#8217;. The mercurial real estate market now has more sellers than buyers, as Redfin reports that sluggish home prices have grown at their slowest pace in [&hellip;]<\/p>\n","protected":false},"author":613725,"featured_media":164987,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7381],"tags":[],"class_list":["post-183645","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-housing-prices"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/183645","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/613725"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=183645"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/183645\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/164987"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=183645"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=183645"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=183645"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}