The state of the US real estate market could not be worse at the moment. Home prices have been on a consistent downward decline over the last several months. This trend is similar to other declines seen in the second sustained downturn in 2022 and between 2007 and 2011. The current episode of price decreases looks more like a correction. That’s a remarkable shift, coming only after a sharp pandemic-era rally that had inflated prices to record highs.
This is why so many are surprised by the current drop in home prices. This decrease comes in the wake of an increase that marked the COVID-19 housing boom. Prospective homebuyers are already pinched with high interest rates and a shaky economy. The end result is that sales have dropped down to the low side of the range we’ve seen these past several years. Whatever the cause, this recently ongoing downturn is indeed a serious matter. More importantly, it’s a reflection of the broader economic strife that has upended consumer confidence and spending.
The last round of persistent price drops like these was 2007-2011. Much of these declines can be attributed to the legacies of the mortgage crisis. As so many homeowners went into foreclosure and other forms of financial distress, home values plummeted. The present political moment seems eerily like that time. Yet it differs in origin, primarily due to the rapid inflationary pressures experienced during the pandemic. Now, all that’s needed is a big market correction.
In light of these developments, retail investors would be wise to tread lightly. According to our background outreach, reports consistently show that 77.37% of retail investor accounts lose money trading CFDs. This is particularly the case when dealing with selected providers ranging in Spread Betting. This statistic screams exactly what’s wrong with speculative investments in times of market upheaval, especially in the realm of real estate.
As cracks begin to show and prices do inevitability drop, analysts are watching the housing market’s direction with baited breath. The continuing drop invites legitimate concerns about long-term price stability and whether a recovery will come at all. Those economic indicators would suggest home prices will continue to face downward pressure in the near term. This will remain the case unless there is a drastic change in market fundamentals.