Somewhat, but remember that house prices are sticky. If I can't sell my house and get into one with a similar value (both price and features) with near net zero change in my debt and payments I'm likely to stay put. Of course once I decide to move I'll be looking at cheaper and more expensive places, but if I can't break even on a like for like move why would I move? I'll just ride this market out for another 10 years. (note too that my mortgage is less than 3% - one more reason moving anytime soon would be a terrible thing for my life)
If my house is worth less than what I owe then moving (selling short) can make sense.
Houses are not just an investment for most people. There are investment factors, but they are also the place you live. Thus most people cannot just sell or not - they also have to consider where will they live next if they sell. Even if I knew exactly where the bottom would be odds are I'd still not sell because I don't have options to live elsewhere.
~4M homes transacted in 2025. Price levels will decline over time, it's just who has to sell first. Life/forced sales (divorce, death, relo, downsize for costs, etc) are up first vs irrational sellers pining for historical price levels. Foreclosures are rising (especially in Florida, taxes and insurance going up), but not materially imho (yet? tbd based on how the economy holds up, all real estate is local).
Of course there are always people who need to sell for whatever reason. There are a large number of people not in the market who otherwise would be, but that doesn't mean nobody is in the market.
That is one reason. Others are they got a job in a different city. Their health declined and so they can't live at home. They got married and don't need two houses. If you cannot think of a half a dozen others in the next 10 minutes either you didn't try or your need to practice creative thinking.
The reasons are not important for this discussion though - all we need to know is some people have other pressures such that the one I listed isn't compelling to them.
Do note that, even if the math works out such that the bank doesn't actually lose money, a short sale remains on your credit history for the subsequent seven years, which makes it very difficult to buy another house during that period. It's not something you want to do if you can avoid it.
I said CAN not will be worth it. Details of your particular situation matter, for some they should hang on while for others the credit hit is too small to matter. You need accountants and lawyers to advise you based on your exactly situation not internet commenters.
People moving isn't driving the real estate market. It is people dying or being born. Unfortunately you cannot bring real estate and other investments like your retirement entitlements with you when you pass away from this life, so something will happen to your house.
> If my house is worth less than what I owe then moving (selling short) can make sense.
I believe this varies by state but I thought in some states the lender can come after you for the difference and in others you can just walk away (albeit with a credit ding).
If my house is worth less than what I owe then moving (selling short) can make sense.
Houses are not just an investment for most people. There are investment factors, but they are also the place you live. Thus most people cannot just sell or not - they also have to consider where will they live next if they sell. Even if I knew exactly where the bottom would be odds are I'd still not sell because I don't have options to live elsewhere.