Are House Prices Dropping Yet? Market Pulse

Why Do Home Prices Drop? It’s Not Just About Listings

Many sellers are surprised when their local market shifts. One day homes are selling in hours — the next, price cuts are everywhere. But this isn’t random. Real estate follows a predictable pattern.

The 7–11 Year Economic Cycle — Explained

Back in 1860, economist Clement Juglar video observed a repeating pattern in business cycles — especially in real estate and capital investment. His theory?

Markets move in 7 to 11 year cycles, from boom to bust and back again.

We see this play out in real estate time and time again:

• Rapid growth in prices (FOMO)

• Over-leveraging (buyers stretching thin)

• Market stall (buyers pull back, inventory rises)

• Price correction (values drop or flatten for years)

• Note the red arrow, showing the general value trend overall
  

  

  
  

Many areas in the USA peaked around 2023–2024, we’re now in the correction phase of the cycle. And based on history, that phase typically lasts 3.5 to 5 years down to the bottom, then creeps back up. So - if you are thinking of selling, after discussing with your real estate expert, have a 10 year mindset to hold the home, when it will most likely be worth considerably more, rent it out for that period, - OR sell it now to maximize the profit before you see more slides, when that is happening in your area.

Why Prices Can’t Stay High Forever: The Affordability Cliff

Right now, we’re experiencing the worst housing affordability in modern U.S. history — and this isn’t just a talking point.

According to analyst Nick Gerli of Reventure, the affordability index (which compares median income to home prices + interest rates) is at its lowest point in decades. Back in the day, it took 2-3 years average household income to purchase the median priced home in the area, now it is often 5-8 X average household income. Affordability crisis in the USA

How many years of average household income it takes to buy a median-priced home. For example, in California, a ratio of 8 means it costs 8 times the average annual income to afford a typical home

Simply put:

People can’t afford to buy. And if buyers can’t buy, sellers have to lower prices.

Here’s what’s driving this:

• Mortgage rates have doubled since 2021

• Home prices remain high

• Wages haven’t kept up

• Nervousness about the economy
  

In some markets, the monthly payment on a median-priced home has doubled — pricing out entire buyer pools. This is why we're now seeing:

• More listings sitting

• More price cuts

• Less bidding

• Tougher appraisals

  What This Means for You as a Homeowner

  
  

The Price Cut % reflects the share of listings that had a price reduction each month. When this number rises above historical norms, it's often a leading indicator that home prices may decline in the near future. Data source: Realtor.com

Florida price cuts per active listings

If you’re planning to sell:

• Watch local price cuts and inventory — they’re early signals

• Understand that today’s price is tomorrow’s comparable — waiting too long can cost you more

• Consider strategies like CashCPO or Certified Pre-Owned to stay ahead of the curve and attract real buyers faster
  

If you’re planning to buy:

• Know your numbers

• Look for opportunities in areas with softening prices or long DOM (days on market)

• Consider homes with pre-sale inspections, appraisals, or flexible seller terms

Home Price Forecast – Source: Reventure  Dark blue areas represent the largest projected price drops.  Forecasts are available by ZIP code — to get yours, call us anytime at 828-333-4483 and leave your address. We're available 24/7.

History Doesn’t Repeat, But It Rhymes

No one can time the market perfectly — but patterns like Juglar’s 7–11 year cycle, affordability constraints, and national buyer behavior give us the tools to make smarter, more informed moves.

Want to know where your neighborhood stands in the cycle? Call us at 828-333-4483 or visit AllstarPowerhouse.com for your personalized Market Pulse. June 2025