Is a 50 to 60 Percent Home Price Crash Coming in 2027?

Why I don’t see a 50 to 60 percent home price crash coming, and what could actually cause one

Today’s real estate question is: is a 50 to 60 percent housing market crash coming in 2027?

In my opinion, no. I keep hearing this from people online, and honestly I’m kind of tired of it. But I did my due diligence and went through their main points one by one. Most of them don’t hold up. There is one thing I think could cause a real crash later, though, and it’s not what they’re talking about.

I’m Shawn Yu, a broker in Bethany, 97229, and Beaverton, and I’ve been doing this since 2008. I talked about this on my podcast on November 2, 2026, and this post follows that video.

“Prices have to fall back to match incomes”

The first argument is that home prices are a bubble compared with incomes, so prices have to fall back to around 2012 levels until they match median incomes again.

My counterpoint is that this ignores inflation. The value of money keeps going down, and we know incomes haven’t kept up. That’s been happening for decades. Milk, bread, gas, housing, everything goes up. If home prices had to come down to match incomes, then bread and gas would have to come down to match incomes too. That’s not how it works. Some people will make a lot more money than before and can afford more expensive things, and some people will stay at their current income while everything else gets more expensive. That may trigger some people, but that is the reality.

“Buyers have stopped buying”

Fewer people are buying, that part is true. Mortgage rates are high, prices are high, choices are limited, and the economy is weak. Nobody knows if that’s temporary or long-term.

But people have not stopped buying. I do weekly updates, and there are always a few hundred homes selling every week in my cities. What’s happening is fewer listings, fewer buyers and fewer transactions. We’re somewhere in the middle between a fully open market like 2019 and a closed market where nobody is listing or selling. We just have a lower transaction number.

“Listings are surging and sellers are giving up”

Listings have been going up gradually, but they’re not exploding. And that sentence contradicts itself. When sellers give up, they take the house off the market, so listings go down, not up.

A seller who gives up decides not to sell and keeps the house. That doesn’t crash the market. A crash comes when sellers have to sell and don’t have the option to keep the house and live in it. That’s exactly what happened from about 2008 to 2011. I started my business in 2008, so I saw it firsthand. People had subprime loans with adjustable rates, and a mortgage payment could jump from $2,000 to $4,000. There were bankruptcies, the stock market crashed, and people lost their savings. They had to sell, and sellers competed on price cuts to sell before the house next door.

Today is different. Say someone has a mortgage under 3 or 5 percent, and their payment is around $2,000 a month, just as a hypothetical. If they sell and buy something new, it could be $4,000 or more a month. There’s no reason to do that. So when the offers aren’t good, they say, “I’m not going to sell this time,” and pull it off the market or rent it out. A lot of the off-market listings I see are like that. That’s sellers giving up on selling, not prices crashing.

“Foreclosures are coming like 2008”

The number they use is mortgage delinquency at about 4.4 percent. That’s a little higher than I thought, and the typical range is under 2 percent. But the peak in 2010 was about 10 percent, which means about one out of 10 homeowners couldn’t pay the mortgage. And being late doesn’t mean an immediate foreclosure. There’s a grace period, and some people catch up.

The bigger difference is how many owners are underwater, meaning they owe more than the home is worth. That’s when you see short sales. Right now that’s only about 2 percent of homeowners. Foreclosures happen every year, even in 2018 and 2019, and they may be slightly elevated, but they’re not close to 2008. I wrote more about that in Portland foreclosures are not 2008.

“The stimulus money caused a bubble”

Here are some numbers a lender I work with shared the morning I made the video. About 40 percent of US homes have no mortgage. About 70 percent of mortgaged homes have a rate under 5 percent, and about 21 percent are under 3 percent. Most loans since 2010 are fixed rate, and adjustable-rate loans were one of the main causes of the 2008 crash. As she put it, sellers with a $2,000 payment aren’t taking lowball offers just to take on a $5,000 monthly replacement. They just delist.

Property taxes, insurance and HOA fees are a real problem

This one is correct, and it troubles me. Property taxes, homeowners insurance and HOA fees are going up a lot in many places. In Oregon, Measures 5 and 50 limit property taxes, so it’s not as bad. But Multnomah County added extra levies, and homes above the median price there have been coming down. Some of the very nice homes in the hills, like Forest Heights, I believe have dropped more than 20 percent. That’s one county and one section of the Portland metro, though. In the rest of the metro, prices did come down, but not that much.

HOA fees matter too. My own HOA went up about 13 percent in the last year, and I asked for a breakdown. If you own in an HOA, this is the time to get involved, even be a board member if you have to. I took a class from an HOA attorney who said most HOAs in the Portland metro don’t meet the reserve requirement. If the roof, siding, electrical or plumbing goes, owners get a special assessment, and that affects value. When HOA dues get out of control, home prices in that community will suffer.

What could actually cause the next crash

The thing I’m watching is buyers who bought with expensive mortgages expecting rates to drop. You probably heard “date the rate, marry the house” in 2022 and 2023. I never said that, and I never will. Some people who listened bought expensive houses at high rates, and now some of them have to sell because of a job transfer. They can’t sell for enough, and renting it out only covers about two-thirds of the cost. They’re stuck.

Right now there are a lot of creative mortgage products, like temporary buydowns and three-, five- and seven-year ARMs. If rates don’t come down by the end of those terms, those owners will have a hard time. Add a job loss, a job transfer, a divorce or a death in the family, and those homes come on the market. If enough of them come at once while buyer demand stays low, sellers compete against each other and keep cutting prices. That’s when a crash comes. Based on when these loans started, I think the risk window is roughly 2027 or 2028 through about 2033.

I’d also watch out for co-ownership offers, where a company keeps part of the ownership while the buyer pays the mortgage and extra fees. I don’t know all the details, but I’ve heard of programs where owners can’t sell because of the penalty. More hands in home ownership, you get less ownership. Whenever you hear “creative financing” or “smart homeownership,” stay away from it.

Summary

I don’t think a 50 to 60 percent crash is coming. Most of these arguments are clickbait that can cloud your judgment on a big decision. The next crash will come when owners with $5,000 or $6,000 monthly payments are forced to sell, and they compete against each other on price while buyer demand stays low. Until you see sellers cutting prices to beat each other instead of pulling the house off the market and staying, it’s not a crash. If you’re buying, run the property taxes, insurance and HOA numbers on every home, because every home is different.

For more on timing, see why waiting for a rate drop or a crash could cost you more. If you’re thinking about selling in Bethany, 97229, Cedar Mill or Beaverton, start with what your home is worth. Get your home’s value. Call or text Shawn Yu at 503-515-4499.

Thanks for reading. Have a great day.

Shawn Yu, Shawn Realty
shawn-realty.com