Will Home Prices Crash? Here’s What You Need to Know.
You might be wondering if home prices are going to crash, and you’re not alone. Some people are actually hoping for a drop to make purchasing more affordable. But according to the experts, that’s not what’s on the horizon. Here’s why.
Supply and Demand Rule the Market
At the core of rising prices is the imbalance between supply and demand. Right now, there are more people looking to buy homes than there are homes available. Nationally, we’re facing a housing shortfall of millions of homes. As David Childers, President of Keeping Current Matters, says: “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.”
How Did We Get Here?
For over 15 years, homebuilders haven’t been building enough homes to meet buyer demand. After the 2008 housing crisis, new construction slowed significantly and has only recently started to recover. But even with an uptick in construction, we’re still playing catch-up, and it’s not enough to make up for years of underbuilding.
What About Next Year?
Most experts predict home prices will keep rising, but at a slower, healthier pace. However, local market conditions will vary. Some areas with more inventory might see prices level off or decline slightly, while others with tighter inventory will continue to see growth.
Bottom Line
The truth is, until supply catches up with demand, home prices will likely remain steady or increase.
