Key Takeaways:
- Here in the Triangle and across the country, dwindling inventory has helped to drive up home prices.
- Many buyers and sellers are wondering if these trends are here to stay, but it’s hard to know exactly what the market will do in the second half of 2021.
- Want to learn more about making a move in the Raleigh area? Contact Linda Craft & Team at (919) 235-0007 to get started today!
Here’s Why Home Prices Are All About Supply and Demand
As the country continues recovering from the COVID-19 pandemic, we’re still seeing an unprecedented surge in home prices. However, most of these trends can be chocked up to the simple principle of supply and demand.
The price of any item (including homes) is determined by how many items are available compared to how many people want to buy that item. As a result, the strong year-over-year home price appreciation is simple to explain. The demand for housing is up, while the supply of homes for sale hovers at historic lows.
Want to see how supply and demand are impacting home prices? We have three maps that can help you break down the numbers.
The average home appreciated by 12.6% last year
The above map illustrates how much home prices have appreciated since 2020. As you can see, states in red—like Arizona, Utah, and Connecticut—experienced unprecedented price hikes. Here in North Carolina, most homes appreciated by a whopping 13%, which is over a full percentage point higher than the national average.
Almost every state saw a drastic cut in available inventory
This map shows how much inventory has fluctuated since 2020—and unsurprisingly, every state except Washington DC saw a steady decrease in available housing supply. If you compare these two maps, you’ll notice a correlation between the change in listing inventory and price appreciation in many states. The best examples are Idaho, Utah, and Arizona. Though the correlation is not as easy to see in every state, the overall picture is one of causation.
The reason prices continue to accelerate is that housing inventory is still at all-time lows, while demand remains high. However, this may not be the case for much longer.
Could relief be on the horizon?
Many buyers are wondering if we’ll see more inventory hit the market this year, and the latest data has experts feeling optimistic. As the map indicates, 39 of the 50 states (plus Washington DC) saw increases in inventory over the last month. While North Carolina hasn’t made any significant inventory gains, we could see more seller confidence during the latter half of 2021.
Bottom Line: Now’s the Time to List Your Raleigh Home
While it’s normal to be concerned about rapid price increases, these changes can be attributed to great demand and limited supply. Going forward, if the number of homes for sale better aligns with demand, price appreciation will adjust to more normal levels.
Have questions about buying or selling in the Triangle? Linda Craft & Team can help! Contact your Raleigh real estate experts for a free home valuation and answers to all of your questions.