A reckoning in home prices is coming.
Although the home price bubble is still percolating in some places, with the average sales price up 5% in the third quarter compared to last year (up 11% in Miami!), the slowing U.S. economy almost ensures there will be a reckoning in 2024.
Home prices everywhere are well above the level that local incomes can support, so prices will have to realign themselves everywhere. How fast that process takes will differ from market to market. In some markets, there will be a sharp correction over a couple of years; in others, the process will play out much longer. (In the 1980s, after a boom, home prices in New York stayed flatfor 10 years.)
In some markets, mainly in Florida, strong demand for properties may keep prices high for a longer period, but in others it’s difficult to see why prices shot up in the first place. These are the prime suspects for a significant correction in the next year.
The accompanying table shows 12 markets where home prices jumped almost 50% over the past three years, while the local population either stagnated or actually decreased. That probably happened with a very small number of sales, but thin markets can fall as sharply as they rise. If you were thinking of selling a property in these markets, ”immediately” would be the best time to do it.