When Will Home Prices Drop? Experts Weigh In on Inventory, Insurance, and Seller Strategy
It’s Christmas Eve, and as the year wraps up, the real estate market is still buzzing with activity and complex questions. Homebuyers and current owners are looking for answers on everything from how to sell a home quickly to the rising cost of ownership and the million-dollar question: When will prices finally come down?
On this episode of Welcome Home Radio, Blair Thomas, Tom Holm, and Jeff Duffy provided a much-needed reality check on the current state of real estate and offered practical, actionable advice for 2026.
1. The Loaded Question: When Will Home Prices Come Down?
Given the reality of higher interest rates, higher taxes, and climbing insurance costs, affordability is severely strained. So, what will it take for prices to pull back?
The experts agreed that significant price reduction requires a massive increase in available inventory—a factor currently being controlled by the supply side.
Builder Strategy is Key: Homebuilders are actively slowing down the pace of construction on standard homes (spec homes in subdivisions) to maintain their high pricing and prevent having to “revert back” on values. They are controlling supply to protect their margins.
Foreclosures are Increasing: While foreclosures are trending higher into 2025 (especially on the East and West coasts where overpricing was rampant), this increase is likely not enough to shift the national needle.
The Global Picture: Tom Holm noted that even though many regional markets (like the DFW area) seem strong, they are still subject to the national economy. While he doesn’t foresee a bust like 2008, a minor recession or significant market cool-down is possible, which often starts with overpriced coastal areas.
The Bottom Line: Don’t hold your breath for major short-term price drops. Home prices will likely only be impacted by a significant drop in interest rates, a major shift in the jobs report, or a flood of new inventory. For the time being, the increase has slowed, but prices remain firm.
2. Strategic Selling: How to Attract Buyers Now
Selling in a tougher market requires strategic incentives that directly help the buyer afford the home.
Instead of spending $15,000 on renovations a buyer might not like, the team advised offering that money as a financial concession at closing. This is more attractive because the buyer can use the funds for:
Rate Buydowns (2-1 or 3-1): This helps the buyer reduce their interest rate for the first one to three years, dramatically lowering their initial monthly payment.
Closing Costs/Repairs: The funds can cover closing costs or be used for the exact repairs/upgrades the buyer wants after moving in.
High-ROI Cosmetics: Simple fixes like decluttering, painting a scuffed wall, or refreshing the front door are still worthwhile, as buyers often lack the vision to see past clutter or minor cosmetic flaws.
3. Essential Advice for Navigating Rising Insurance Costs
A major pain point for homeowners is the skyrocketing cost of insurance, which significantly affects monthly escrow payments.
Shop Annually: The consensus was clear: you must shop for quotes every year. Insurance costs are up universally due to global risk factors, but shopping keeps companies on their toes.
Understand High Deductibles: Be extremely aware of policies requiring 3% deductibles (or higher). On an expensive home, this means you are paying a massive amount out-of-pocket for common claims like hail or roof damage, making filing a claim impractical.
Educate Yourself: Know your policy types (HOB vs. HOA) and understand what is covered (water damage from a leak vs. water damage from a flood). Agents can help, but homeowners need to be vigilant against oversellers in the repair industry.
4. An Important Reminder: Help is Available for Foreclosure
While the general foreclosure trend is up, the panel offered a strong reminder for anyone struggling with payments: Do not be embarrassed, and reach out for help immediately.
Banks Don’t Want Your Home: Foreclosure is expensive for the bank (costing them $25,000 to $30,000 on average). They would rather work with you.
Last-Minute Solutions Exist: Even a week before foreclosure, if you have equity in your home, it is possible for a dedicated agent to list the property and close a quick sale, allowing you to walk away with cash instead of losing everything.
Final Thought: “We’ll be here to help you to get you to clear to close… The market’s trying to come back. There are many things, many impacts that are going to happen, and we’ll see what takes place.”
Merry Christmas and Happy New Year!
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