Data Shows Home Prices Will INCREASE?

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The big story in real estate is what’s going to happen with prices and what’s going to happen with inventory. Well, here’s a really serious overview of this from Yahoo Finance, “harsh warning America needs more housing”, and this affects a lot of us in the construction industry because we’re not wanting to build any new houses on speculation because nobody’s buying. 

The fact that nobody’s buying may or may not change the price, it just means nobody’s going to buy anything. A lack of buyers and demand doesn’t necessarily crash the price unless sellers are willing to sell. Remember, a housing crash requires both a buyer pushing the prices down but also a willing seller. If buyers are not buying and sellers don’t want to sell either, the prices aren’t going to go down, it’s going to be a stalemate. For a few years, there’s been a shortage of homes available for buyers when prices were reasonable or cheaper, and the mortgage rates were low, it showed up in the multiple bidders on houses because the buyers wanted to buy what’s there. 

The houses have gone up in value and the mortgage rates are higher. It doesn’t change the number of people who want to buy a house. When there were 20 bidders on a house when prices were low, those bidders didn’t just go away after the bid. They’re still out there wanting to buy a house.

So the market still has the same demand for buyers, it just doesn’t have the same number of willing sellers. So that may not result in a huge price crash. Some sellers who are looking to get a telephone number high price for a house may see that price come down a bit, but they’re not going to go into crash mode. Because according to the article, we don’t have any inventory. It all comes down to monthly payments. Even if the monthly payment has gone up, the interest rates have gone up from 2%-7%. Now, a mortgage payment that was $2,000 a few years ago is now $4,000. Many sellers are opting to not sell and to keep the equity and low mortgage payment they already have, rather than risking it by moving.

Certainly, there are some people that will need to sell, but how many are there? There are only 84 million single-family homes in this country and there are roughly 350 million people who live here. And that number of single-family homes is not going up any time soon because of interest rates and no demand for new construction.

So this is going to hurt the housing market in the future even more than it is today because there are still more people every year entering the home-buying market. If houses are not being built, the demand for homes will be even more significant in the future. Let us know what you think in the comments.

Have questions about the real estate market, mortgage rates, or construction? Schedule a consultation with a licensed general contractor!