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Home prices would need to crash 32% to offset today’s high mortgage rates
New York Post • • business
Key Points:
- US home prices would need to drop about 32% to make current high mortgage rates as affordable as the low rates locked in by many existing homeowners, a decline worse than the 27.5% fall seen during the 2006-2010 housing crash.
- The median home price in August was $429,100, but at today’s 7.3% mortgage rate, monthly payments would be roughly 47% higher than those with pandemic-era loans averaging 3.88%.
- This disparity has caused a mortgage-rate lock-in effect, discouraging homeowners from selling and contributing to a shortage of existing homes despite high prices and borrowing costs.
- Experts do not expect a steep price collapse; affordability is likely to improve gradually through a mix of lower rates, income growth, and slower price increases, while homeowners benefit from record accumulated equity.
- However, many homeowners must move due to life events and face significantly higher costs when refinancing or buying anew, posing particular challenges for first-time buyers trying to enter the market.
