The headlines still dance around the truth, but anyone watching closely knows something is seriously wrong with real estate in 2025. Home prices are starting to slip. Inventory is rising. Buyers are backing away. And this time, consumers are more financially broken than ever before.
In November 2007, home prices began to decline. One month later, the Fed reacted with a rate cut. They had room to act. Back then, inflation was low and debt wasn’t as suffocating. It took until the summer of 2008 for the housing collapse to fully reveal itself.
Today, we are already seeing the early fractures. But the Fed is frozen. Inflation is still running hot thanks to sticky prices, global tensions, and the ongoing tariff war. Cutting rates now would pour fuel on inflation. So the pressure on housing just builds with no relief valve.
Mortgage rates near seven percent have locked buyers out and trapped sellers in. Anyone who refinanced during the zero-rate era is holding their home hostage. At the same time, more homes are quietly coming to market. Builders are slashing prices. Sellers are accepting less. The shift is happening. Slowly. But unmistakably.
The real problem is deeper. Consumers are tapped out. Credit cards are maxed. Savings are gone. Delinquencies are climbing. Student loan payments are back. We may be looking at the most financially exhausted consumer base in American history. That’s a death sentence for housing demand.
And while some claim supply is still too low for a major drop, that argument ignores how fragile demand has become. Affordability is broken. Wages are not keeping up. Buyers simply can’t stretch anymore.
Layered on top of that is the worst commercial real estate crisis in American history. Offices sit empty. Malls are dying. Lenders are writing down billions. Banks are exposed, but few want to talk about it. The cracks are spreading through the financial system with every missed payment and every silent default.
The federal deficit just hit over one trillion dollars in only seven months. Treasury supply is surging. Foreign demand is fading. The Fed is barely participating in the bond market. Interest rates are being kept high not by policy choice but by sheer necessity. The entire financial system is stretched thin.
Housing needs relief. But relief is not coming. Not this time.
We are not in 2007. This is something else. Back then, people still had some financial cushion. This time, they are running on fumes.
