It is much easier for real estate to increase in price then fall

[Henry Lazerow]

First off I personally would love to see prices fall as am an investor myself and work majority with BP investor buyers who want easy to cashflow deals, lower prices would boost my sales numbers. I have many clients wondering why real estate is only 0-10% cheaper then when rates were much lower with payments often up 50%? The answer is pretty simple. 

It's easy for real estate to rapidly rise as we saw in many areas going 20-50% up in 2 years. Supply is low and sellers are always willing to sell higher and higher which snowballs fast. The flip side is it's very difficult though for prices to fall as sellers do not willingly want to sell lower and with 30 year fixed rate mortgages sellers will just hold/rent out rather then sell at a reduced price, creating even more of a supply/demand inbalance. 08 crash it was not up to sellers to decide to sell lower and prices fell due to mass foreclosures bringing a ton of supply to market with banks selling for pennies on the dollar. With difficult loan qualifications and ARMs being very rare on sf and 2-4 units over the last 10 years there is not going to be mass foreclosures. People are more then qualified for their loans and it is actually difficult to get financing. 

Even with an increase over the last year due to inflationary pressures we are currently only at 92,000 foreclosures in q3 2022 compared to 930,000 foreclosures in Q3 of 2009. Huge differance. 

I predict we see 0 price growth for the next 2 years but prices will not fall any further in most markets. Properties will get cheaper in real costs due to inflation/rent growth but I do not see the actual sales prices changing significantly. Renting will likely become more prevalant at middle to upper incomes with affordability issues continuing.