Are you waiting for home prices to drop? You’re not alone. Many buyers are hoping for a significant decline to make purchasing more affordable. However, experts agree that a dramatic price drop isn’t on the horizon—and here’s why.
Supply and Demand: The Key Driver of Prices
Like any market, the housing market is driven by supply and demand. When there are more buyers than available homes, prices rise.
Currently, the U.S. faces a housing shortfall of several million homes. This imbalance between high demand and limited supply keeps prices steady or rising. As David Childers, President of Keeping Current Matters (KCM), explains: “The main driving force on pricing is the limited amount of inventory in most markets across the country. That issue is not going to be solved overnight or in the next twelve months.”
Why Is Inventory So Low?
For over 15 years, homebuilders have struggled to keep up with demand. After the 2008 housing crisis, construction slowed significantly, leaving a gap that’s yet to be filled.
Even with new home construction increasing in recent years, builders are still playing catch-up. According to AmericanProgress.org, they’re not meeting today’s demand, let alone addressing the deficit from years of underbuilding. Until the supply catches up with demand, home prices won’t drop significantly.
What About the Year Ahead?
While prices are expected to rise over the next year, the pace of growth should slow to a more manageable level.
However, it’s important to remember that real estate is local. Some markets may experience slower price growth or slight declines if inventory improves, while others will continue to see prices climb due to tight supply. That’s why having a real estate expert who knows your local market is invaluable.
Let’s Talk About Your Market
If you’re wondering, “Will home prices drop in my area?”, it all comes back to supply and demand. With limited inventory in most markets, prices are expected to stay steady or rise.
I’m Teresa Hill, your local real estate expert. Let’s discuss what’s happening in your neighborhood and create a strategy tailored to your goals. Call me today, and let’s make a plan that works for you!
*Sourced from Zillow, NAR, Realtor.com, Americanpress.org, & Keeping Current Matters
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