Here’s How Much US House Prices will Plunge in Current Market Bubble

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US house prices are likely to decline by as much as 20% over a multi-year correction before the housing market can get back on track, according to a research firm.

The co-founder of DataTrek Research, Nicholas Colas said:

“US home prices need to fall by about 15-20 percent over the coming years in order to return to their long run growth trend. That process is clearly starting but has a good way to go,”

Colas added that peak home prices in June were 29% higher than the historical trend:

“Higher mortgage rates will do part of the work in bringing prices back down, of course, but history says any correction in this market will take time,”

Mortgage rates have more than doubled in 2022. As of this week, a 30-year fixed mortgage averaged 6.49%, according to Freddie Mac.

Fed Chair Jerome Powell said:

“Coming out of the pandemic, rates were very low, people wanted to buy houses, they wanted to get out of the cities and buy houses in the suburbs because of COVID,”

“So you really had a housing bubble, you had housing prices going up very unsustainable levels and overheating and that kind of thing.”

“Now the housing market will go through the other side of that and hopefully come out in a better place between supply and demand,”

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