Home Prices Are Already Crashing

Photo by Alejandra Cifre González on Unsplash

Home prices have already come down, even though the Federal Reserve has just started letting their mortgage-backed securities mature off their balance sheet.¹ One can only imagine how much more prices will fall from here. On the other hand, most of us remember the last housing crash (so we don’t have to merely imagine a situation).

What is undeniable is that in many markets prices have already started to come down/correct. Why wouldn’t there be a full-blown correction/crash? The simplest explanation is that the process has already started. Why? Because mortgage rates have spiked in light of inflation.

Fed’s portfolio of MBS. Since it is about to go down, this should put even more pressure on mortgage rates.

Mortgage rates have spiked at a historical rate.

A. With all this in mind, what can we establish?

1. Well, for one, the recent housing boom is over.

2. For another thing, it’s unlikely that prices will go up soon.

3. If anything, it’s very likely that prices will continue to go down.

4. It’s likely that prices will go down a lot more.