But here’s the twist: these aren’t my predictions.

These were the actual rate cuts that happened in 2007—after the Fed left rates unchanged for the first eight months of that year.

Sound familiar? In 2025, we’ve seen the same pattern so far: no rate cuts yet. But many believe the Fed will have to start lowering them within weeks, and continue through the rest of the year.

The question is: what happens next?

A Look Back at 2007–2008

In 2007, once the Fed started cutting, the housing market didn’t stabilize. Instead, the U.S. faced the worst housing crash in modern history. Even as rates dropped from 5.25% in September 2007 to near 0% by December 2008, home values collapsed.

Why? Because lower rates can make borrowing cheaper, but they can’t fix deeper issues like oversupply, job losses, or excessive household debt. When confidence disappears, buyers don’t rush in—no matter how low mortgage rates go.

Echoes of Today

Back then, I heard the same reassurances we hear now:

• “We’re not in a bubble—prices will only go sideways, not down.”

• “Housing shortages mean prices can’t fall.”

• “My home’s value will hold—my agent says so.”

But reality won out.

Now, in 2025, here are the warning signs:

• Housing inventory is climbing fast

• New construction sits at a 10-month supply

• Credit card debt is at all-time highs

• Unemployment is ticking up

• Layoffs are accelerating

• Income growth has stalled

• National savings rates are near record lows

• Home prices remain at all-time highs

Will a rate cut be enough to convince buyers to take the plunge in this environment? Especially with job insecurity growing? I don’t think so.

Government Moves on Housing

There’s also talk of government intervention—Trump has floated a national housing emergency and the idea of 40-year mortgages. If that happens, all bets are off, because artificial stimulus can delay market corrections—but rarely prevent them altogether.

The Bigger Picture

Rate cuts matter, but they’re just one lever among dozens. In 2007, they weren’t enough to stop a collapse. Today, with household debt stretched and affordability at record lows, history suggests that lowering rates may ease some pressure, but it won’t erase the structural risks in housing.

The math is simple. Look at the fundamentals, not the headlines.