There is no doubt that there have been massive changes in the housing market recently. Throughout 2020-2021 home values increased about 29% (normal yearly increase in home value is 3-4%). It was not uncommon for homes to receive multiple offers over asking price with appraisals and inspections waived. This was driven by the COVID pandemic and people reevaluating their living situations. Many people were able to work from home and left the city for the suburbs, or found they wanted more space for that home office or play room. It was a white hot market. Now, things are beginning to cool off, and the chatter is that there will be a housing collapse. This is inaccurate. It’s actually a great time to buy or sell a home! Here’s why:
The Housing Market is Driven by Supply & Demand
There is one thing that drives the housing market: supply and demand. To put it simply, home prices go up when there is a low supply of homes and high demand, and home prices go down when there is an increase in supply of homes and a decrease in demand.
- Overall, there are less homes available for resale than there was in 2007
- New home builds are still lower than 2007
- Foreclosures were placed on hold for 2+ years due to COVID
- 5 million more millennials then previous generation are now in their 30’s, which is a prime age for home buying.
- Households in the US have increased by 12 million since 2007
- Investors are buying 25% of homes on the market
So, while we are seeing the housing market change, we are not seeing a drastic change in supply and demand. If anything, we are becoming a more stable market. Economists are predicating that in 2023, home values will increase 3-5%. Home values will not decline. This is why it is a great time to buy! You can gain equity in your home, and not have to deal with so much competition. We are seeing appraisals, inspections, and seller concessions coming back!
It also continues to be a great time to sell! As written above, there is still high demand for housing, and limited supply. Home values are not decreasing. What we are seeing with listings is the prices matching the value of the home. Over the past 2 years, people were paying more than what the home was valued at. So it may look like prices are dropping, but really, home prices are reflecting the actual value – and again, that has not decreased!
In this market, pricing your home accurately is the key to selling quickly and for the most money. Contact me today to see what your home value is, or if you are interested in seeing what is available on the market.
Century 21 Toma Partners