CalculatedRisk Prediction: real housing prices will decline 25% over next 5-7 years

SOURCE:  CalculatedRisk 

SUPPLY IS INCREASING:  

Months of supply [measured as #listing/(sales rate)] is enear a ten-year high (red line) and there are five months of supply (blue line) currently under construction, so it will get bigger.  

DEMAND IS FALLING 

due to rising mortgage rates (and immigration slowing?):

CALCULATEDRISK PREDICTION:  10%+ Nominal Price Declines, Real price declines of 25% over next 5-7 years.

Since national house prices increased very quickly during the pandemic - up over 40% - it seems likely that some of the usual “stickiness” will not apply. I think the most likely scenario now is nominal house prices declining 10% or more from the peak, and real house prices declining 25% or so over the next 5 to 7 years.