The law of supply and demand explains what’s happening with prices in the current real estate market. Put simply, when demand for an item is high and supply is very low, prices can rise significantly. When the supply of the item decreases, prices fall.
Home prices have risen 18% since this time last year. But what’s driving the increase? When we look at buyer activity data and compare it to the seller traffic, we can see buyer demand continues to outpace seller activity by a wide margin. In other words, the demand for homes is significantly greater than the current supply that’s available to buy.
Where Are Prices Headed?
Recently we have seen a shift in the market. There has been a recent slowdown from the hot, intense seller’s market to a more steady market. Many experts forecast prices will continue to increase and no, we are not headed into a recession. Today’s housing has a strong foundation with tight lending practices and qualifications to avoid financial fallouts as we saw in the past. Today, perspective is important: a slight moderation of home prices does not mean prices will come crashing down or fall. Increased prices may still occur at a slower pace, but experts still expect them to rise. But, don’t expect to receive top dollar for your home as prior sales have been. It may still be a sellers market, but be prepared for longer wait times to be successful in a sale.
What Does This Mean for Homebuyers?
If you’re waiting to enter the market because you’re expecting prices to drop, you may end up paying more in the long run. While prices may increase at a slower pace in the coming months, experts still expect them to rise. That means the home of your dreams will likely cost even more in 2023. Buying this year could be a great move. This slight slowdown on the market due to the rising of interest rates could be to your advantage. You may be able to purchase a home for a more reasonable price than seen months prior. If you’re a potential homebuyer, contact me today to discuss what that could mean for you if you wait even longer to buy.