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.
Don’t Wait Until Spring To Sell Your House
While spring is usually the peak homebuying season, you don’t actually need to wait until spring to sell.
2 of the Factors That Impact Mortgage Rates
If you’re looking to buy a home, you’ve probably been paying close attention to mortgage rates. Ever wonder why they change?
Will a Silver Tsunami Change the 2024 Housing Market?
The thought is that as baby boomers grow older, a significant number will start downsizing their homes, but will it happen this year?
Are More Homeowners Selling as Mortgage Rates Come Down?
While there isn’t going to suddenly be an influx of options for your home search, it does mean more sellers may be deciding to list.
Experts Project Home Prices Will Increase in 2024
Expected home price appreciation also means if you’re ready, willing, and able to buy, waiting just means it will cost more later.
3 Must-Do’s When Selling Your House in 2024
A real estate professional can help you with expertise on getting your house ready to sell.
3 Key Factors Affecting Home Affordability
Home affordability depends on three things: mortgage rates, home prices, and wages and they’re moving in a positive direction for buyers.
Why You May Want To Seriously Consider a Newly Built Home
Newly built homes are becoming an increasingly significant part of today’s housing inventory.
Homeownership Is Still at the Heart of the American Dream
Buying a home is a powerful decision, and it remains at the heart of the American Dream.
Why Pre-Approval Is Your Homebuying Game Changer
If you’re thinking about buying a home, pre-approval is a crucial part of the process you definitely don’t want to skip.