Not necessarily. If the price goes down, the amount of mortgage you need to get also goes down. It becomes easier to save for a downpayment. A bigger downpayment means saving on possible expensive mortgage insurance.
We ended up putting ~10% down on a house. The PMI for that was ~$70/mo. We refinanced a year later and the home value increased that we were able to get rid of the PMI after only a year. I would have missed out on the lowest interest rates ever really seen and bought with house prices getting even higher over $840 in insurance on a several hundred thousand dollar purchase.
I would suggest you don't assume you need to avoid PMI. For me, if I would have waited it would have cost me >$100k waiting to avoid "throwing away" $840. Obviously, every market is different, every buyer is different, the financial world is different now than a few years ago, your mileage may vary, I am not a lawyer, etc. Just saying, look at some actual terms before deciding.
That's the whole point of my comment, it isn't always better. I could have avoided any PMI by waiting a bit longer to amass more savings to have a larger down payment. But in doing so I would have avoided <$1,000 in PMI payments but increased the cost of the house by >$100k. It was definitely the better move to just pay the PMI in this case than to try and avoid it.
I'd gladly pay $1,000 to make something >$100,000 cheaper in the end.
I bought my first home at end of the last recession (price at floor for my market) and maximized my leverage (little down) AND got low rates. So I did great and assuming you did the same it probably worked out the same for you. But the high rates now make the math a bit more complicated. And, I don’t know if I’d assume the same level of appreciation I did back then. At that time, the recession was a few years in and it felt like that bulls were awakening so I was very confident in my purchase. Right now, it’s early in the recession, we don’t even know how long/far prices will decline, and rates are pretty high and most assets feel inflated. So, I wouldn’t feel very confident about it right now. I’d actually recommend most people just do lowish down, hope for a refi opportunity in a couple years, but make sure you have some cash for repairs/maintenance/rainy days as well.
In any case, how much does a home price have to come down to offset interest rates climbing? It’s a lot. Probably something like 20% (I can’t do the math rn)
Generally speaking it's a rule of 10x in purchasing power (not price, clearly, because we haven't seen the corresponding price correction yet).
So 1% increasing in mortgage rate should be 10% decreasing in purchasing power, just based on the math. And yes I believe there has been a 2% increase in average mortgage rate (3% -> 5%) so 20% sounds right.