For most of the 20th century, there was no real rise in housing prices. That is, prices went up in line with inflation.
In the last few decades, though, home prices increased faster than inflation, perhaps because of falling interest rates, which made mortgages more affordable. After such a steep rise, many homes may have been overpriced.
Now, mortgage delinquencies are rising. If foreclosures increase, more homes will come onto the market, at a time when higher mortgage rates and tighter lending procedures will take buyers from the market. Those factors will depress home prices.
In some parts of California and Florida, home prices already are down 20-30 percent from their peaks. Other areas also may be hard-hit.
Therefore, home sellers likely will have to take lower prices. If you can manage to avoid a sale, waiting for the eventual rebound may pay off. On the other hand, this might be the right time to start shopping for a home, including a second home.