In today’s ever-changing market, one question stands out among our buyers: “Are home prices finally going to fall?”
As the market dynamics shift and activity slows down, homeowners are curious about potential drops in housing prices. Despite hopes for a decline, the reality suggests otherwise. Economists predicted a 2.4% increase in housing prices for 2024. So, what keeps the prices high? Let’s dive into the three key factors shaping our market.
Key Point #1: Low Inventory
Even with higher prices, the demand for homes remains strong. Rising interest rates have encouraged homeowners to stay put longer, and our seasonal inventory surge hasn’t matched previous years. While this may seem challenging, low supply actually benefits homeowners by maintaining property values.
Key Point #2: Increased Rental Rates
A crucial factor to consider is the surge in rental rates. During the pandemic, just like housing prices, rental rates soared. In fact, the average U.S. rental is now 30% higher than pre-pandemic levels. As inflation drives rental rates up, owning a home with a fixed monthly payment becomes increasingly appealing.
Key Point #3: Limited New Home Construction
Since the 2008 crash, new home constructions have been relatively scarce. Builders became cautious about saturating the market, leading to a slower pace in new constructions. Although new projects are gradually catching up, the supply is expected to remain constrained, keeping home prices elevated.
If you’re curious about your home’s current value or have any real estate-related questions, don’t hesitate to reach out to my team at 256.799.9000. We’re here to assist you every step of the way.
