Is this good news or bad news? As always, it depends on if you are a buyer or a seller. In my neighborhood there have been very few homes for sale in 2022. There is currently one down the street with an asking price of $395K. That price was dropped by $5K in early September. They will need to drop the price by another $15K to meet current valuations. Having seen the value of our home double in the last 10 years has been nice. But it is unrealistic to expect that to continue. This is a long overdue correction. I just hope it doesn't become as extreme as the correction we are seeing in the stock market.
Compared to the housing market, the stock market has been a disaster in 2022. This does not bode well for those of us who depend on our investments as our only income. Every time there is a major drop like this, I hear from financial advisors who tell me that this is just part of a financial cycle and that I should continue to hold until things improve. Advisors will point to past corrections and use that to prove their point, having never lived through a correction themselves. Every correction is different. I've lived through 8 major market downturns. This one feels like the start of a two-year period of negative growth. The pain will come for many when they lose their jobs and then their homes.
I've moved more than half of my money into a money market fund or cash. During past corrections I have taken advantage of higher interest rates on CD's. Sometimes having deposits in several different banks depending on who had the best rates. This was back in the days before online stock trading. Today, you can find CD's online, but I think it would be better to use that money to pay off a mortgage. The value of not having a mortgage before retirement is one less bill to worry about. You need to look at how much you are paying in interest on the loan vs. how much you could get by having that money in a CD. In most cases your mortgage rate will be higher than a short-term CD rate.