If You’re Going to Be a Bear…Be a Grizzly Bear

Each week I write about what I see happening in the real estate and mortgage markets. Sometimes it’s rates, loan programs or strategies for buyers and sellers. Every once in a while, however, I see something that concerns me.

Today is one of those days…and I’ll begin by saying I hope I’m wrong.

Let’s go back to 2001–2005. Things were great. Home prices soared (54%), mortgage rates averaged roughly 6.2%, and getting a mortgage was…how should I put this?…about as difficult as fogging a mirror…I’m kidding…but not by much.

Those were the days of stated income, stated assets, 100% financing and frighteningly relaxed underwriting. Homeowners watched their equity explode and began believing home prices had nowhere to go but up….Sound familiar?

The problem wasn’t simply that prices had risen dramatically. Sellers began believing those gains were permanent. Someone who gained $200,000 in equity in five years…sometimes for little more than keeping the lights on and mowing the grass…wouldn’t consider lowering the price $20,000 or offering $10,000 toward closing costs….Why should they? Their house was worth what they said it was worth…Until it wasn’t.

Around 2008, I was quoted in a national newspaper expressing concern about the euphoria surrounding housing. My comment was simple:“Trees don’t grow to the sky.”

Neither do home prices. National home prices ultimately declined more than 25% from the housing-market peak to the early-2012 bottom and that’s where my concern about today begins.

From 2020 through 2025, U.S. home prices increased roughly 50%–55%—eerily similar to the extraordinary appreciation of the early 2000s. There is one HUGE difference: mortgage underwriting today is substantially more responsible. We don’t have anything resembling the widespread stated-income, no-document lending environment of 2005–2007. But underwriting isn’t what has my attention.

Seller psychology is.

Metro Atlanta homes are now taking close to 60 days to sell in many areas. Just a few years ago, homes sold in days with multiple offers, often above asking price. Today we’re seeing longer marketing times, price reductions, and increasing seller concessions.

Sellers are adjusting. I’m just not convinced they’re adjusting quickly enough.

Consider a $700,000 homeowner who has experienced roughly 50% appreciation since 2020. They may be sitting on hundreds of thousands of dollars in additionalequity, yet refuse a $20,000 price reduction or $15,000 closing-cost contribution.

Here’s where history gets uncomfortable.

A 25% decline on a $700,000 home takes the value to approximately $525,000.

Suddenly dropping your price $30,000 today doesn’t sound so bad, does it?

I’m not predicting another 2008. Today’s market has tighter lending standards, substantial homeowner equity and a very different inventory situation. But markets don’t need identical circumstances to correct. Sometimes prices simply get too far ahead of affordability.

If competing homes are listed at $700,000 and aren’t selling, listing yours at $699,000 probably isn’t a strategy.

Maybe it’s $675,000. Maybe it’s $650,000. Maybe it’s an aggressive seller-paid rate buydown.

Give buyers a compelling financial reason to choose your house instead of the other 15 sitting on the market. I’ve watched this movie before. I hope this time the ending is different.

But if you’re selling in a market beginning to favor buyers and you’re finally ready to become bearish on your asking price…

Don’t be a Teddy Bear.

Be a Grizzly Bear.