. Shepherdson warned in 2005 that a downturn in housing would trigger a recession; home prices peaked in 2006 and fell until 2012.
For one, a pullback in lending will keep demand low, causing prices to plummet, he said. Regional banks have been more hesitant to lend as they try to keep liquidity levels high after Silicon Valley Bank, Signature Bank, and First Republic Bank failed due to runs on deposits. Shepherdson expects home prices to fall another 15% from current levels. Home prices have already fallen about 5% since last June, according to theAnother reason Shepherdson believes home prices have so far to fall is because the home price-to-income ratio remains historically elevated. Below is the National Association of Realtors' Housing Affordability Index, which takes into account incomes, home prices, and mortgage rates. "Prices are really elevated," Shepherdson said.
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