The housing market has been going through many major shifts. Mortgage rates are increasing, people are questioning their ability to buy a home, and the seller’s market has started getting support from these tailwinds. It all came to a conclusion last summer when home prices reached their peak. And when there are peaks, there are retraces. Headlines saying “home prices will go down soon” started to circulate.
But those expectations weren’t matched. Even though the number of buyers isn’t high anymore, house prices aren’t going down. They stay flat, with many houses and real estate owners refusing to budge and reduce home prices.
Commenting on this, Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), said he doesn’t expect this sentiment to change soon.
“Home prices will be steady in most parts of the country with a minor change in the national median home price.”
While many thought that the lowering number of buyers would motivate house-sellers to drop the prices, another major factor isn’t letting that happen - low inventory. The lack of homes available for sale is not allowing people to push down their prices.
Lawrence Yun had this to say about it.
“We simply don’t have enough inventory. Will some markets see a price decline? Yes. But with the supply not being there, the repeat of 30% price decline is highly, highly unlikely.”
Here is the graph showing the changing trends in inventory levels for the past few years.
The lack of supply is not letting the prices go down. Bankrate states -
“This ongoing lack of inventory explains why many buyers still have little choice but to bid up prices. And it also indicates that the supply-and-demand equation simply won’t allow a price crash in the near future.”
Sellers know that the inventory is low. And the demand, while small, is still large enough to warrant interest. Therefore, they are not budging from their demands, which is allowing them to maintain their home equity instead - which has lowered their chances of engaging in distressed sales like short sales and foreclosures.
Furthermore, with many homeowners having locked mortgage rates, house prices aren’t going to go down any time soon.
The lack of homes available for sale, therefore, requires people to find real estate experts who understand the housing market and can help with navigating the current volatility.
Bottom Line
Low buyer demand caused many to believe that home prices would crash - but that didn’t happen because of low inventory. There aren’t just enough homes for sale. So, it would behoove you to contact a trusted real estate agent if moving this spring is your desire.
