While we can all agree that high prices and low inventory is not a recipe for a healthy real estate market, reversing the trend too quickly can cause issues as well. Prices are predicted to start declining towards the end of 2022 and throughout 2023 and 2024. This may be good for prospective homebuyers, but it’s not good for sellers who purchased relatively recently.
A sharp decline in prices could result in negative equity for some people looking to sell, meaning that they won’t be able to sell normally and may have to go into foreclosure. This is not the same type of recession that we’ve just experienced, but it’s a recession nonetheless. Fortunately, it’s not likely to result in a crash, since the continued low inventory is a positive for sellers. The market is expected to begin to stabilize in 2025, but not without steep economic losses.