Buyers want a good deal. Sellers want top dollar. And in today's market, both can get what they want, it all depends on where you live.The housing market is no longer moving in one direction. Some
Will Home Prices Come Down?
Dated: December 19 2024
Views: 107
You might be wondering if home prices are likely to drop significantly. In fact, some people might even be hoping for a downturn to make buying a home more affordable. However, experts widely agree that a crash isn’t on the horizon—here’s why.
The root cause of rising home prices is a simple one: demand outweighs supply. There are far more buyers in the market than available homes for sale, which continues to push prices upward.
Let’s dive into this dynamic and uncover why, on a national level, home prices are unlikely to see a significant decrease anytime soon.
Prices Are Driven by Supply and Demand
Like any other market, the housing market follows the basic principle of supply and demand—when demand is high and supply is low, prices tend to rise.
Currently, the U.S. faces a significant housing shortage, with a shortfall of several million homes. This means there are far more buyers (demand) than there are homes available for sale (supply). This imbalance is the primary reason why home prices are unlikely to drop significantly at the national level.
Why Is There a Housing Shortage?
For over 15 years, homebuilders have not kept pace with growing buyer demand. Following the 2008 housing crisis, home construction slowed dramatically and has only recently begun to rebound (see graph below):
Despite an increase in new construction over the past few years, builders are still struggling to catch up. According to AmericanProgress.org, they’re not meeting today’s demand, let alone compensating for the years of underbuilding.
As long as this housing shortage persists, home prices are likely to remain steady or continue rising in most areas.
What’s Ahead for Next Year?
Most experts agree that home prices will continue to rise next year, but at a slower and more sustainable pace (see graph below):
Working with a local real estate expert is extremely important. They can provide insights into your market and help you understand how these trends impact your area.
If you’re wondering what it’ll take for prices to come down, it all comes back to supply and demand. With inventory still limited in most markets, prices are expected to stay steady or rise.
If you’d like to know what’s happening with home prices in your neighborhood, I’ll be happy to help you understand our market and create a plan that fits your goals. Contact me today!
Joe Bereczki
Joe Bereczki is a Realtor with 25+ years of experience helping buyers and sellers in La Mirada and North Orange County. For Joe, real estate is about people, relationships and finding the right place ....
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