6 Causes of Housing Prices will not drop, according to this Rielor

As a real estate professional, one of the most common questions I receive is: “When will housing prices go down?”

Makes sense; Buying a home is a huge financial solution. With the titles predicting catastrophes, recessions and market declineIt is natural to want to wait for the home market become more affordableS

Still, real estate does not behave the way many people think it does. Of course, home values ​​can hesitate, but prices are stuck at all timesS We can partly blame the inflation that makes everything more expensive. We can also blame a A large -scale shortage of housing To maintain competition. In the bigger part of the United States, we still do not have enough homes for those who want to buy them.

This is my job as a real opinion to tell my customers never get in And buy the first home they see. But if you are still sitting on the sidelines and waiting for a big drop in housing prices, you may be waits foreverS

Home prices soon do not fall

Many people believe that real estate is like stocks – prices are rising, prices are decreasing. If you are on the market time, you can enter into A largest possible priceS With the exception of homes, they are not like shares at all.

Housing prices not only decrease. The combination of factors prevents them from falling significantly, from searching and supply to inflation, from mortgage rates to the emotional attachment of homeowners to their properties.

I have been in the real estate industry long enough to know that the decline of housing is not happening in a vacuum. Let’s dive into the main reasons why a major decline in prices in today’s market is unlikely.

1. The supply is low, the demand is high

At its core, the home market is guided by supply and supply. When there are more buyers than available homes, prices rise. Depending on what report you are reading, the US is short between four and six million homes.

Severe insufficient home supply has been a problem for more than a decade. After the financial crisis in 2008, Departed construction was delayed drastically And he never completely reaches back. Restricting laws for zoning and increasing construction costs have made it difficult to build new homes at the required pace. In many areas, the high cost of destroying new construction stimulates builders simply to focus on higher-end homes, leaving buyers for the first time With even less options.

At the same time, demand for homes is strong. Millennials, the biggest generation in the country, are in their main years of buying a home and many are determined to buy. Enough of the market demand exceeds supplyHousing prices will remain strong.

https://www.youtube.com/watch?v=0b2fvmmkpae

2. Inflation maintains housing prices elevated

If you were at the grocery store, filled your gas tank or paid for each service lately, you saw first -hand how Inflation affects pricesS The apartment is not different.

Inflation exerts long -term pressure on prices. After reaching a peak in early 2022, inflation begins to facilitate after Federal Reserve Interest SeriesS But recent data show that consumer prices are rising again.

As inflation erodes the value of money, tangible assets as real estate become more expensive. A home that costs $ 300,000 in 2010 will now cost about $ 427,000 in inflation alone. Even if the demand for housing is temporarily cooled, home values ​​tend to increase over time, simply because of how our financial system works.

3. It costs a lot to sell a home

Selling a home is not as simple as you list it online and wait for offers. This is a process that comes with significant costs for sellers, including real estate commissions, Final costOrganizing costs and potential repairs.

For many homeowners, the sale is expensive and there is no very financial meaning. Sellers would prefer to remain placed rather than take a financial blow, and less homes on the market prevent prices.

4. The speed locking effect freezes the delivery

The speed lock effect is one of the biggest reasons why existing homes do not hit the market.

Timely Up to 2 to 3%S These homeowners are not impatient to trade their mortgage below 3% for a new 7%. Even with the increase in home values, many homeowners do not want to make a significantly more mortgage payment for their next home.

To a mortgage Prices are significantly reducedMany homeowners will remain placed, maintaining inventory and prices stable.

https://www.youtube.com/watch?v=ifbzcwsez8

5. People who sell homes also buy them

Most sellers are also buyers. Every home that is sold is usually offset by another purchase. Unlike in 2008, when the foreclosure flooded the market, today’s sellers usually move optional, not necessary.

The demand for homes has a lot in common with vital stagesS People marry, have children, move to work, reduce or look for better schools. Even in a high quality environment over the last two years, these factors have maintained the home market.

6. Housing owners see a higher value in their properties

People have a deep emotional connection with their homes and this plays a role in pricing. When homeowners see that a neighbor’s house is being sold for the highest dollar, they often believe that their home costs the same or more. Even in the more slow markets, housing They are reluctant to accept less offers, unless they have absolutely sold.

Unlike shares where people are rapidly reducing losses, homeowners tend to keep their properties rather than accept perceived loss. This is another reason why housing prices tend to be sticky, even during economic downturns.

Would the recession lead to lower home prices?

I often hear the argument that housing prices will drop if we enter a recession. Although it is true that economic downturns can affect housing, most recessions do not lead to a significant drop in prices.

Historically, housing prices have remained stable or even increased during recessions. The dismissals tend to influence lower-income workers who are less inclined to own housing, and those who have homes usually have enough equity to avoid difficult sales. Unlike in 2008, where risky lending resulted in foreclosuresToday’s homeowners are in a much stronger financial situation.

Why it costs to wait more to buy a home

Over the last 60 years, housing prices have estimated an average percentage of 4.6% annually. If you are waiting for a residential disaster, you are betting on a trend that has been remarkably consistent.

Even if housing prices are stagnant, interest rates can remain high, which affects much more than a small price drop. And that can cost you more to wait. Hiring instead of buying means to miss Years in equityAnd inflation will simply continue to make homes more expensive over time.

Home buyers’ tips

If you are trying to decide whether to buy, focus on your own financial situation instead of trying to market time.

Financial stability: If you can afford a advance paymentMake sure your estimated monthly mortgage payment is convenient and sustainable. You must have enough money at the bank to end the cost, Insurance, taxes and other fees for homeownersS

Think about different markets: Not all real estate markets are created equal. Take a look at what is happening in your particular area. During this article, the inventory of Florida grows as the northeast is still in very shortness.

Think long -term: Real estate is not about what will happen today or tomorrow, but rather decades from now on. As a general rule, plan to stay in your home for at least five or seven years so that short -term market fluctuations do not matter much.

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