Will Home Prices Fall If Mortgage Rates Stay High? What Richmond Buyers and Sellers Should Know

by Jason Burke

"If mortgage rates stay around 6% to 7%, won't home prices eventually come down?"

The answer, according to many housing experts, is probably not by much. While higher rates have certainly affected affordability, they haven't caused home prices to fall significantly in most markets. (CBS News)

Why Haven't Prices Dropped More?

It comes down to supply and demand.

Higher mortgage rates have discouraged some buyers from entering the market, which has helped cool price growth. At the same time, many homeowners are holding onto mortgage rates in the 2% to 4% range and don't want to trade those loans for today's higher borrowing costs. That has kept inventory relatively tight.

Experts interviewed in the article suggested that if rates remain elevated, home prices may soften modestly in some markets, but a major nationwide decline remains unlikely because there simply aren't enough homes for sale.

What If Rates Fall?

Ironically, lower mortgage rates may not improve affordability as much as buyers hope.

Several experts pointed out that lower rates could bring more buyers back into the market, increasing competition and potentially pushing prices higher again. That's one reason many buyers have stopped waiting for the "perfect" rate and are focusing instead on whether a home's monthly payment works within their budget.

I recently wrote about why waiting for mortgage rates to return to the 2%–4% range may not be the strategy many buyers think it is. I also discussed how today's rates compare to historical averages and why focusing on a comfortable monthly payment can often be more productive than trying to time the market. You can read that article here: Mortgage Rates, Rent, and Reality: A Practical Look at Buying a Home Today in Richmond.

You've probably heard the phrase, "Marry the house, date the rate." While that saying doesn't fit everyone's situation, there is some truth behind it. You can potentially refinance later, but you can't go back in time and buy a house at yesterday's price.

What Does This Mean for Richmond?

Here in the Richmond area, we're seeing many of the same trends.

The region has added more than 50,000 residents since 2020, and inventory remains relatively limited compared to historical norms. Well-priced homes in desirable areas of western Henrico, Hanover, Chesterfield, and Goochland continue to attract strong interest, even with mortgage rates hovering around 6%.

Buyers have also become more selective. They're paying closer attention to deferred maintenance, comparing monthly payments carefully, and negotiating more often than they were a few years ago.

For sellers, that means pricing correctly and preparing your home well are more important than ever.

For buyers, it means focusing less on trying to predict rates and more on understanding what you can comfortably afford today.

The Bottom Line

No one knows exactly what mortgage rates will do over the next six months or even the next year.

But if rates stay elevated, most experts believe we'll likely see slower price appreciation, not a housing crash. And if rates decline meaningfully, increased competition could put upward pressure on prices once again.

That's why I encourage clients to avoid trying to time the market. Instead, make decisions based on your personal goals, timeline, and budget.

If you're wondering whether it makes sense to buy, sell, or simply stay put for now, I'd be happy to talk through your options. I can also connect you with a trusted local lender to help you understand what today's rates mean for your purchasing power.

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Jason Burke headshot Let's talk! I’ve proudly served the Greater Richmond area as a full-time Realtor for more than 19 years, and I’ve called Virginia home for over 25.