Hi. Jon Tripp here with The Domus Group at Keller Williams United. This is Day 3 Question 3 in a 30 day series answering relevant real estate questions we’re frequently asked. Today I’m answering the question: “Is the real estate market about to crash?”
Let’s take a look at the data and you decide.
The latest housing data out there* – from July 2021 – demonstrates year over year price increases exceeding 18%. Experts (and even non-experts) agree that these increases can’t be sustained indefinitely.
Buuuuut, prices are where they are because there is a supply and demand issues at play.
This basic economic principle can’t simply be ignored. According to the National Association of Realtors data, there are anywhere from 4-6 million housing units shortage in the country right now.
And with at least 16 months of construction lost to the global pandemic, where an average of 1.2 million homes are built annually, that’s not insignificant. Lumber prices and labor shortages are two additional factors that have impacted ongoing construction. Millenials are coming into their own and now comprise a significant portion of the demand for homes (new and resales).
You’ve got an influx of immigrants into our country, previous owners who were burned in the mortgage meltdown – who are now desirous of getting back into the maket…ahhhh and yet there’s no place to put them.
So you can see why the demand is so high and supply so low. And we’re not even talking about the parallel challenges in the rental market.
So to the question “Is the real estate market about to crash?” my answer is no – that it will continue to aggressively chug along until supply comes into balance with demand.
We may not see as steep appreciation over the next year or so as we have for the past couple years, but we will see positive growth I expect for the next 2-3 years before balance is achieved.
I hope this video has been helpful to you. An educated consumer stands a greater chance of being successful in the market. If you have a question you’d like to ask me, comment below or reach out to me directly at 703-552-5259.
Tomorrow I’m going to answer the question: “I’m thinking about waiting to buy a home. Should I?” Tune in tomorrow
If this information is helpful, give me a thumbs up and share with a friend. My name is Jon Tripp. Thanks for joining me.
*The S&P Case-Shiller National Home Price Index +19.7%; The CoreLogic Home Price Insights Report +18%; Federal Housing Finance Agency House Price Index +19.2%