Exploring the Factors Behind the Steady Home Prices Despite Predictions of a Crash
The housing market has been a hot topic of conversation lately, with many people wondering whether prices will continue to rise or if we’ll see a crash in the near future. One thing is for sure, the market has shifted quite a bit in recent years, and it’s important to understand the factors that are driving these changes.
One major shift in the market has been the rise in mortgage rates. Last year, rates rose dramatically, which impacted many people’s ability to buy a home. This made it more difficult for potential buyers to get approved for a mortgage, and as a result, many people put their home buying plans on hold.
Another factor that has been impacting the market is home prices. After several years of rapid price appreciation, home prices finally peaked last summer. These changes led to a rise in headlines saying that prices would end up crashing. However, even though we’re no longer seeing the buyer frenzy that drove home values up during the pandemic, prices have been relatively flat at the national level.
According to Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), this trend is likely to continue. Yun predicts that “home prices will be steady in most parts of the country with a minor change in the national median home price.” While some markets may see a price decline, Yun points out that with low inventory levels, a repeat of a 30% price decline is highly unlikely.
One reason for this is the low inventory of homes on the market. We’ve been at or near record-low inventory levels for a few years now, which is putting upward pressure on prices. Buyers have little choice but to bid up prices due to the lack of available homes, and this is unlikely to change anytime soon.
Rick Sharga, an industry expert, predicts that low inventory levels will continue to vex the housing market throughout 2023. This means that there will continue to be a lack of supply, which will keep prices from crashing .
Another factor that’s impacting the market is the fact that sellers are under no pressure to move. With plenty of equity in their homes, they’re not motivated to sell at lower prices. This is acting as a cushion for homeowners, lowering the chances of distressed sales like foreclosures and short sales. With many homeowners locked into low mortgage rates, their equity cushion isn’t going anywhere.
With so few homes available for sale today, it’s more important than ever to have an expert on your side who can help you make informed decisions.
While there has been a lot of talk about a housing market crash, the low inventory of homes on the market is likely to keep prices from plummeting. However, this lack of inventory is also putting upward pressure on prices, making it more difficult for buyers to find affordable homes. As we move forward, it will be interesting to see how the market continues to evolve, and whether we’ll see any major shifts in the coming months and years.
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