Somewhat, but remember that house prices are sticky. If I can't sell my house and get into one with a similar value (both price and features) with near net zero change in my debt and payments I'm likely to stay put. Of course once I decide to move I'll be looking at cheaper and more expensive places, but if I can't break even on a like for like move why would I move? I'll just ride this market out for another 10 years. (note too that my mortgage is less than 3% - one more reason moving anytime soon would be a terrible thing for my life)

If my house is worth less than what I owe then moving (selling short) can make sense.

Houses are not just an investment for most people. There are investment factors, but they are also the place you live. Thus most people cannot just sell or not - they also have to consider where will they live next if they sell. Even if I knew exactly where the bottom would be odds are I'd still not sell because I don't have options to live elsewhere.

What we've seen in Oslo, Norway, is mostly that the market slows down. Those that get lower offers than what it previously was "worth" don't sell. So in the prices graphs it's mostly flat, but then with lower sales total. So it kinda "hides" that things are worth less as it's no transaction. And people don't dare buying before selling, so lead times are quite long.

And then they stop building new stuff while prices are low, so demand will keep prices stable, and when the interest gets lower again prices will probably skyrocket since it's not been built enough in the meantime.

Talking from the Vancouver perspective where we have a similar situation - yes, house prices are going down. People list houses with the same price as 3-4 years ago but most close below the asking price.

> But will lower demand coupled with still high interest rates actually lead to reduced housing prices?

One theory says that either lower employement causes lower demand and therefore lower interest rates OR lower employement causes the FED to lower interest rates to stimulate spending, and in EITHER case the response to your premise of "low employement + high interest rates" should be "interest rates will come down", and separately "low employment implies low demand implies house prices will come down".

There is also "Return to Office" polices that may be buoying housing prices near the urban core.

Real estate owners will rather let their buildings rot to zero value than reduce their prices. They have juicy government bailouts coming, and social security and pensions to pay for their upkeep. They don't need the money. It was just an investment to get rich without having to do anything, and if it doesn't work, they'll let it rot because they deserve their massive return god damn it!

For more competitive markets, it seems to largely depend on if foreign and out-of-state rich buyers are still interested in buying in an area. The fairly-to-ultra-rich ~5% are driving prices and demand of almost everything in these times.

I'm seeing homes in my neighborhood sit on the market for 3-4 months before dropping prices and finally selling, about 20-25% off the original listing.

It has in several cities, including Austin, where I live.