While some sectors of society have benefitted from the changes brought on by the pandemic, such as e-commerce sites and the used car market, you can’t deny the negative effect it has caused to others. In the United States specifically, purchasing a house proves more challenging than before.
The Rising Cost of Homeownership
In the spring of 2020, the National Association of Realtors declared that the price of existing homes had jumped a record 17 percent in the previous year. Although appreciation has cooled since then, house prices are still considerably high. With rising 13 percent from September 2020 to September 2021, one can’t feel too at ease.
The housing market’s foundations are far from the crisis from 2005 to 2007. However, prospective homeowners home buyers may still wonder whether the housing market is about to crash or not.
Reasons You Shouldn’t Worry
The rise in house prices may be a cause for concern, but it’s not likely to cause a sharp fall. Instead, experts say there will probably be a plateauing of prices, but nothing near what happened during the 2008 housing crisis.
According to house economists, here are a few reasons the American housing market is far from crashing:
Insufficient Supply Amidst Heightened Demand
“The fundamental driver of the U.S. housing market is the difference between the number of homes sold and new homes completed, also known as the supply-demand imbalance,” says Sam Khater, Chief Economist at Freddie Mac.
The harsh reality is that more people are ready to buy a home than housing for sale. While this is true for single-family homes, it is also true for apartments. The realty market is in desperate need of development, but for all the new homes being built, there is a shortage of people to fill them.
However, as builders bring more properties to the market, more homeowners put their houses up for sale, and prospective home buyers get priced out, there will eventually be a balance between supply and demand.
Incredibly Low Inventories
The shortage of homes for sale is extreme. The U.S. is short 5.24 million homes, leading to extremely low inventories. There is no room for home prices to fall with such low inventories.
Even if home prices fall, the decrease will be limited to immediate areas where more homes are available.
Low Mortgage Rates
While home prices are rising, mortgage rates are moving in the opposite direction. Since home prices are high and mortgage rates are low, the American dream of homeownership may become more attainable than before. While mortgage rates have risen slightly, the increase won’t significantly impact prospective buyers’ purchases.
Conclusion
The good news is that while the housing market is experiencing some growing pains, the United States is not headed towards another real estate bubble. The housing market is far from crashing, but it is currently in high demand. If you have been looking for the right time to sell a home, the time is now! Reach out to a real estate agent and start looking for cash home buyers immediately.
If you’re having trouble selling your property, why not sell it to us at Quick n Easy Offers? As a cash home buyer, we provide speed and convenience for those transitioning between significant lifestyle changes. With over 20 years of buying properties in America, you can rely on us to complete transactions while putting more money in your hand. Get a cash offer today!
