When Will Housing Prices Drop? A Look at Current Trends and Predictions

As a local real estate agent in Sacramento, I've been closely monitoring the market and fielding questions from clients about when housing prices might drop. While it's impossible to predict the future with certainty, I can share some insights based on current trends and historical data.

Current Market Trends

The Sacramento housing market has been experiencing a strong upward trend in recent years, driven by factors such as low interest rates, a robust economy, and limited inventory. However, there are signs that the market may be starting to cool down slightly.

According to the Sacramento Association of Realtors, the median home price in Sacramento increased by 2.8% in the last year (September 2023 - September 2024). However, the number of homes sold has increased by 5% during the same period. This suggests that while prices are still rising, the pace of growth may be slowing down.

Additionally, the average days on market for homes in Sacramento has increased from 23 days to 27 days in the past year. This indicates that sellers are taking longer to find buyers, which could be a sign of a cooling market.

Historical Perspective

It's important to remember that housing markets are cyclical. They tend to experience periods of growth followed by periods of decline. Historically, housing price drops have often been triggered by economic downturns or a significant increase in supply. It’s all based on demand and supply. If demand goes up and supply is low, this will result in an increase in home prices as we saw in 2021.

Expert Predictions

While there is no consensus among experts on when housing prices might drop, many believe that a correction is likely to occur at some point. However, the timing and magnitude of such a correction remain uncertain.

Should You Wait for Prices to Drop?

If you're considering buying a home, the decision of whether to wait for prices to drop is a personal one. While it's tempting to try and time the market, doing so can be risky. If you find a home you love and can afford, it may be better to buy it now rather than risk losing out on a good opportunity.

My Advice

As a real estate agent, when I talk to my clients, most of them prefer to wait until interest rates are low. Interest rates and home prices are like a seesaw. When interest rates rise, it becomes more expensive to borrow money for a home, so fewer people can afford to buy. This can slow down the housing market and even cause home prices to fall.

On the other hand, when interest rates are low, it's easier to get a mortgage, so more people are interested in buying a home. This can lead to higher demand, pushing home prices up and sometimes resulting in bidding wars.

Related: Do Interest Rates Really Matter When Buying or Selling a House?

If you need a personalized advice based on your individual circumstances, please don’t hesitate to reach out and we can help you assess the current market conditions, evaluate your financial situation, and help you make informed decisions about when to buy or sell.

Remember, while it's always possible for housing prices to drop, there's no guarantee that they will. In a competitive housing market, timing is everything, So If you're ready to buy a home, it's important to act when you find the right property.

In conclusion, the Sacramento housing market is showing signs of cooling down, but it's still a strong seller's market. If you're considering buying a home, it's important to do your research, work with a qualified real estate agent, and be prepared to act quickly when you find the right property.