Why Home Prices Are Increasing
There are many unsubstantiated theories as to why home values are continuing to increase. From those who are worried that lending standards are again becoming too lenient (data shows this is untrue), to those who are concerned that prices are again approaching boom peaks because of “irrational exuberance” (this is also untrue as prices are not at peak levels when they are adjusted for inflation), there seems to be no shortage of opinion.
However, the increase in prices is easily explained by the theory of supply & demand. Whenever there is a limited supply of an item that is in high demand, prices increase.
It is that simple. In real estate, it takes a six-month supply of existing salable inventory to maintain pricing stability. In most housing markets, anything less than six months will cause home values to appreciate and anything more than seven months will cause prices to depreciate (see chart below).
According to the Existing Home Sales Report from the National Association of Realtors (NAR), the monthly inventory of homes for sale has been below six months for the last five years (see chart below).
Bottom Line
If buyer demand continues to outpace the current supply of existing homes for sale, prices will continue to appreciate. Nothing nefarious is taking place. It is simply the theory of supply & demand working as it should.
Why Today’s Seller’s Market Is Good for Your Bottom Line
The market is still working in favor of sellers. If you house is ready and priced competitively, it should get a lot of attention.
What Mortgage Rate Do You Need To Move?
While mortgage rates are nearly impossible to forecast, the optimism from the experts should give you insight into what’s ahead.
Finding Your Perfect Home in a Fixer Upper
Your agent can also offer advice on which upgrades and renovations will set you up to get the greatest return on your investment.
The Benefits of Downsizing When You Retire
When you downsize your house, you often end up downsizing the bills that come with it, like energy costs, and maintenance requirements.
Why There Won’t Be a Recession That Tanks the Housing Market
The fundamentals of the economy, despite some hiccups, are doing pretty good.
What To Know About Credit Scores Before Buying a Home
Working with a trusted lender is the best way to get more information on how your credit score could factor into your home loan.
Why You Want an Agent’s Advice for Your Move
A real estate advisor can anticipate what could happen next and work with you to put together a solid plan.
Why Today’s Housing Supply Is a Sweet Spot for Sellers
The number of homes for sale and new listing activity continues to improve compared to last year.
The Truth About Down Payments
Unless specified by your loan type or lender, it’s typically not required to put 20% down. That means you could be closer to your homebuying dream than you realize.
Expert Home Price Forecasts for 2024 Revised Up
Now that rates have come down from their peak, and with further declines expected this year, buyer demand has picked up.