Articles

High mortgage rates haven’t pushed down prices, yet.

Prices might even rise, at least initially, as buyers race to lock in properties before they’re stuck with even higher rates. That could cause them to make even larger offers to win bidding wars, which in turn, inspire sellers to raise prices.

Nationally, median list prices were up 15.3% in the week ending March 26 compared with last year

However, many real estate experts predict the party might be coming to an end.

“We have learned from history that prices can fall,” notes Hale. “The more important question is if it’s going to happen right now. And that’s hard to say.”

With much higher mortgage rates, “housing is going to have to adjust. It’s unclear if that will mean falling prices or just slowing price growth,” says Hale.

Zandi believes prices will slow and even dip between 5% and 10% in the most overheated real estate markets.

“The declines are going to be in the parts of the country that got the most juiced up, like Boise, ID, and Phoenix, the Southeast and Florida, and over into Texas,” says Zandi. These are the places that locals are struggling to buy in, particularly as they compete against deep-pocketed investors.

“Those are markets that have seen the most stratospheric price gains, and that’s where we’ll see the most comeuppance,” says Zandi.

“The midtier markets may be the most affected as middle-class buyers are hurting from inflation and rising housing costs,” he adds. “The lower end of the market is likely to fare better as there just aren’t many affordable homes for sale. So those sales are expected to remain brisk.”