Think Home Prices Will Crash? Here’s What the Experts Actually Expect.
Many buyers are still holding off on purchasing a home because they believe prices will eventually come down.
Some are waiting for a major market correction that could make homes more affordable. Others worry about buying today only to see values decrease shortly after they move in.
Those concerns are understandable. After all, no one wants to make a large purchase at the wrong time.
But what if the price decline many people are expecting never actually happens?
Recent data suggests that may be the case.
Why a Nationwide Housing Crash Appears Unlikely
If you’ve spent any time online lately, you’ve seen posts claiming home prices are about to come crashing down. And it’s true that some markets are seeing small price declines right now.
But that’s not the same thing as a nationwide crash.
While some places are going through a price adjustment, Realtor.com data shows home prices are still rising in 71% of housing markets across the country.
The trouble is, since negative news sells, you’re seeing more coverage about how a handful of markets are seeing declines, than how the majority are still seeing prices rise. And that’s unfortunate.
It’s exactly why a lot of buyers end up with the impression that prices are falling everywhere when they’re not. So how do you really know where prices are really headed from here?
That’s where the Home Price Expectations Survey (HPES) from Fannie Mae comes in.
Experts Expect Prices to Rise Over the Next Five Years
Each quarter, more than 100 economists, housing analysts, and market experts share their outlook on future home prices based on current economic and housing data.
Their latest projections show a consistent theme:
They do not expect a nationwide housing crash.
Instead, they anticipate home values continuing to rise over the next five years, although at a slower and more sustainable pace than what we experienced during the pandemic housing boom. (see graph below):
The key takeaway is simple. Most experts expect appreciation to continue. The discussion is centered around how much prices will increase, not whether they will fall dramatically.
And these forecasts are not coming solely from industry optimists. The survey includes a wide range of viewpoints, including analysts with more cautious outlooks.
Even the Pessimists Aren’t Predicting a Crash
Researchers also separated the survey participants into groups based on how optimistic or cautious they were about the housing market.
The result was surprising.
Even the most conservative group still expects home prices to move higher over the next five years.
The more optimistic analysts project annual gains of around 4%, while the more cautious group expects growth closer to 1% per year.
That’s a very different narrative than the one many buyers are hearing online.
The debate among experts is not about whether prices will collapse. It’s about the pace of future appreciation.
This Means Waiting Could Actually Cost You
If you’re delaying your purchase because you’re hoping prices will decline significantly, current forecasts suggest that strategy may not work out as planned.
According to HPES projections, a home purchased for $400,000 today could gain nearly $40,000 in value over the next five years through appreciation alone (see below):
Of course, every market is different, and no forecast is guaranteed. Local conditions will always play an important role in determining home values.
Still, if the majority of experts are correct, the greater financial risk may be waiting for a price drop that never arrives.
Five years from now, buyers may find themselves paying more for the same home while also missing out on years of potential equity growth.
What This Means for Texas Buyers
Texas continues to attract new residents thanks to its strong job market, business growth, and relative affordability compared to many coastal states.
While some areas are seeing more balanced conditions and increased inventory, most experts are not predicting a dramatic drop in home values. Buyers who are waiting for a major nationwide correction may end up watching prices remain stable or continue rising over time.
That’s why it’s important to focus less on national headlines and more on what’s happening in your specific market.
Bottom Line
Many buyers are waiting because they believe home prices will fall significantly. However, the majority of housing experts are forecasting continued appreciation over the next several years.
If you’re trying to decide whether now is the right time to buy, the best approach is to look at your local market, your financial situation, and your long term goals.
If you’d like to discuss what’s happening in the North Texas market and how it could impact your plans, I’d be happy to help.
