Housing Market Myths

How To Tell What’s True and What’s False in Today’s Market

As the real estate market continues to shift, it can be difficult to separate fact from fiction. This is when a real estate professional comes in to help clear up the headlines and offer the full picture when it comes to the housing market. Here are three common myths along with the expert analysis. 

Myth: Home Prices Are Going To Fall

Many homebuyers have been hearing that home prices are going to crash. Headlines typically use similar, but different, terms to describe what’s happening with prices. 

• Appreciation, or an increase in home prices

• Depreciation, or a decrease in home prices

• And deceleration, which is an increase in home prices, but at a slower pace

However, experts claim that they aren’t calling for a decrease in prices. Instead, they believe that appreciation will continue, but at a decelerated pace. Selma Hepp, Deputy Chief Economist at Corelogic, explains, “...higher mortgage rates coupled with more inventory will lead to slower home growth but unlikely declines in home prices.” 

Myth: The Housing Market Is in a Correction

Another common myth that homebuyers are hearing is that the housing market is in a correction. Again, this has proven to be complete fiction. According to Forbes, “A correction is a sustained decline in the value of a market index or the price of an individual asset. A correction is generally agreed to be a 10% to 20% drop in value from a recent peak.” 

Experts project that home prices will continue to appreciate, just at a slower pace. Therefore, the housing market isn’t in a correction as prices aren’t falling. Compared to the last two years, which were record-breaking, the housing market is simply moderating. 

Myth: The Housing Market Is Going To Crash

Is the housing market a bubble ready to burst? Some headlines are claiming so, but experts say today is nothing like 2008 as lending standards are very different. Logan Mohtashami, Lead Analyst for HousingWire, explains, “As recession talk becomes more prevalent, some people are concerned that mortgage credit lending will get much tighter. This typically happens in a recession, however, the notion that credit lending in America will collapse as it did from 2005 to 2008 couldn’t be more incorrect, as we haven’t had a credit boom in the period between 2008-2022.” 

Since the previous housing bubble, lending standards have tightened significantly. Therefore, purchasers who acquired a mortgage over the last decade are more qualified than they were during the years leading up to the crash.

Myth: It’s No Longer a Seller’s Market

Just because the market has shifted doesn’t mean that it is no longer a seller's market. For the past 14 straight years, the number of housing units completed has been below the 50-year average. It’s true that more homes are being built today and in the years ahead, however, we will still be making up for the lack of completed new builds over the past decade. Additionally, although buyer demand has moderated today in response to higher mortgage rates, data tells us that demand will continue to be high due to the large generation of millennials hitting their peak homebuying years. Bankrate explains:

“After all, supplies of homes for sale remain near record lows. And while a jump in mortgage rates has dampened demand somewhat, demand still outpaces supply, thanks to a combination of little new construction and strong household formation by large numbers of millennials.” 

Bottom Line

Despite what you’re hearing about the housing market, it’s important to connect with a real estate professional. That way, you’ll have a knowledgeable authority on your side who knows the ins and outs of the market, such as current trends, historical context, and so much more.