Key Takeaways:
- Home values are seeing an increase
- Housing supply is low, but steadily growing
- If you’re looking to buy, we can help find the perfect home!
If you’re thinking about making a move, one of the first things that’s probably come to mind are what home prices look like for the rest of the year. Ongoing appreciation is expected ahead, which means home prices won’t fall. On the flip side, home values are increasing, which leads to attractive benefits like more equity.
Here’s a look at two key reasons experts believe there will be a continued price growth: supply and demand.
Housing Supply Is Low – But, It’s Growing
As the market moderates, inventory is steadily increasing this year, which is great news as available homes are on the rise. However, it is important to keep in mind that supply is still low. If you’ve been on the hunt for a new home recently, you’re probably aware that there are less homes on the market today.
So, what’s up with the supply issue? The graph below helps display why there still aren’t enough homes on the market today. Retrieved from Census data, the image depicts the number of single-family homes that were built in this country going back to the 1970s.
You may remember the housing crisis in 2008. This monumental period of time plays significance in itself, but the years leading up to it hold key information. The blue bars on the graph above represent the few years prior to 2008. As the graph shows, right before the crash, homebuilding significantly increased. This is because buyer demand was so high due to unstable lending standards, which permitted more people to qualify for a home loan.
The oversupply end result? Significant price drops during the crash and unfortunate closure of some building businesses, which proceeded to cause a long period of underbuilding of new homes. Even with a growth in newly constructed homes this year and in the years ahead, this issue will take time to fully resolve.
As Time Goes On, Millennials Will Drive Buyer Demand
The housing market saw a frenzy during the pandemic because there were more homes for sale than usual. That’s why buyers competed with each other in an effort to get their hands on one of these available properties, even as prices rose due to increased demand. And while buyer demand has stabilized today in response to higher mortgage rates, data predicts that demand will continue to be driven by millennials as they ascend into their peak homebuying years (see graph below):
What This Means for Home Prices
Because of the lingering imbalance of supply and demand, experts predict ongoing home price appreciation. So if you’re worried home values will fall, you can have some peace of mind that home prices aren’t likely to decline.
Bottom Line
Based on all current factors involving supply and demand, experts feel confident that home price appreciation will continue. If you’re looking to buy a home soon, don’t wait! Contact Linda Craft Team Realtors today to get started.