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What Does Supply and Demand Tell Us About Today’s Housing Market?

 What does supply and demand tell us about today’s housing market? The law of supply-demand, a well-known economic theory, is what explains the current market for real estate prices. Simply put, high demand means that prices will rise. Prices fall when there is more of it. Naturally, prices fall when there is less demand. Very high Supply is Very low Prices can go up Significantly.

Understanding the effects of supply and demand can help answer some common questions about today’s housing market.

  • Why are prices on the rise?
  • Where are the prices heading?
  • What does this all mean for homebuyers

Why are prices rising?

The latest Home Price Insights report by CoreLogic shows that home prices have increased 18.1% over the past year. What’s the reason for this increase?

This question can be answered by the National Association of Realtors (NAR), which recently collected buyer and seller activity data. We can see that buyer demand continues outpace seller traffic when we compare NAR’s buyer data to the same period. This means that the demand for homes is much greater than the supply. Bill McBride (author of the Calculated risk blog) puts it best:

“By certain measures, house prices appear high but, from a supply-demand perspective, recent price rises make sense

Where are the Prices Going?

Prices will be affected by the supply of homes available for sale. Experts predict that prices will continue rising, but they’ll probably appreciate slower.

Welcome news may be helpful to buyers who are looking to buy the house of their dreams. Perspective is key in this instance. A slight decrease in home prices does NOT mean that prices will fall or depreciate. Although price increases might be slower than expected, experts still expect them rising.

Five large entities closely following the real estate market predict that home prices will continue to rise through 2022.

What does this mean for homebuyers?

You may pay more if you wait for prices to drop. Prices are expected to rise even if prices increase at a slower pace next year. This means that the house of your dreams is likely to cost more in 2022.

Bottom line

High demand and low supply are the main factors driving today’s high housing prices. Although prices will likely rise at a slower rate in the next months, experts expect them to continue rising. Let’s talk if you are a potential homebuyer and what it could mean if you delay buying.

This post was written by Josh Dotoli! Josh is the owner of Josh Dotoli Group which is a laser-focused real estate team at Compass comprised of industry experts selling Fort Lauderdale’s best neighborhoods. This dynamic group is one of the top-selling real estate teams in South Florida with over $94 million in sales in the past 12 months alone. Looking for Luxury Homes For Sale In Fort Lauderdale? The Dotoli group has got you covered.

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