If you're a homeowner, life is good right now. You’re sitting on a low-rate mortgage, building equity, and watching home values climb. But there’s a strong chance that home prices will decline by 15-20% over the next five to six years - and history tells us exactly why.
From 2001-2006, home prices surged 43%, only to crash by 31% from 2007-2011. Fast forward to 2020-2024, where values have skyrocketed by 52% … far beyond the historical average of 3-4% annual appreciation. That kind of growth isn’t sustainable, and a shift is coming.
Here’s why home prices are likely to face downward pressure between now and 2030:
📉 1. The Inventory Dam is About to Break
For years, record-low inventory has kept prices artificially inflated, as homeowners with 2-3% mortgage rates refused to sell. That won’t last forever.
✅ As rates fall, more sellers will list their homes, increasing supply.
✅ Boomers downsizing and millennials upgrading will further contribute to inventory.
✅ Even gradual increases in supply will erode home price support and shift leverage back to buyers.
🏗 2. A Construction Boom Will Flood the Market with New Homes
The lack of available housing has been a major driver of price inflation—but that’s about to change.
✅ New home construction is set to accelerate in 2025 and beyond as builders respond to pent-up demand.
✅ Federal policies are likely to support homebuilders, with the Trump administration expected to sell off federal land for affordable housing development.
✅ At his FHFA nomination hearing, Bill Pulte called this ‘the golden age of American homebuilding.’
More inventory = downward pressure on home values.
💵 3. Demand Won’t Keep Up with Supply at Current Price Levels
Home prices didn’t drop in 2022-2024 because there weren’t enough sellers. But as inventory rises, buyers will regain leverage.
✅ Many priced-out buyers won’t rush back just because rates drop - wage growth hasn’t kept pace with home price growth.
✅ Affordability still matters. Just because demand was strong at 3% rates doesn’t mean the same buyers can afford homes at 6%.
✅ More homes on the market = buyers negotiating better deals instead of overpaying.
The housing market isn’t crashing overnight, but the forces that fueled price growth over the last few years are shifting. We’ve seen this movie before - and the ending wasn’t great for homeowners who assumed prices would never come down.
