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Will Home Prices Continue To Increase?

Posted by David E. DeChant on Monday, October 22nd, 2018 at 8:59am.

There are many unsubstantiated theories about what is happening with home prices. From those who are worried that prices are falling (data shows this is untrue), to those who are concerned that prices are again approaching boom peaks because of “irrational exuberance” (this is also untrue as prices are not at peak levels when they are adjusted for inflation), there seems to be no shortage of opinion.

However, the increase in prices is easily explained by the theory of supply & demand. Whenever there is a limited supply of an item that is in high demand, prices increase. It is that simple. In real estate, it takes a six-month supply of existing salable inventory to maintain pricing stability. In most housing markets, anything less than six months will cause home values to appreciate and anything greater than seven months will cause prices to depreciate (see chart below).

According to the Existing Home Sales Report from the National Association of Realtors (NAR), the monthly inventory of homes for sale has been below six months for the last five years (see chart below).

Bottom Line

If buyer demand continues to outpace the current supply of existing homes for sale, prices will continue to appreciate. Nothing nefarious is taking place. It is simply the theory of supply & demand working as it should.

 

Source: https://www.keepingcurrentmatters.com/2018/10/22/will-home-prices-continue-to-increase/ 

3 Responses to "Will Home Prices Continue To Increase?"

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Will Home Prices Continue To Increase?
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Posted on Tuesday, October 23rd, 2018 at 12:52pm.

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20 Tips For Preparing Your House For Sale This Fall [INFOGRAPHIC]




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Posted on Wednesday, October 24th, 2018 at 10:03am.

Where Are Home Values Headed Over The Next Few Years? wrote: [...]A Home? Think Again!
Housing Is Still Affordable In The United States!
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Posted on Thursday, October 25th, 2018 at 2:33pm.

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