Given that we have experienced perhaps one of the longest and steepest price increases ever, in house prices, many seem to wonder, will this continue, and if so, for how long, and then what? Since historically real estate prices fluctuate and it is often challenging to accurately predict trends and there is certainly no such thing as a crystal ball, when it comes to making these predictions it is wise to try to avoid any attempt to commercialize: time! After more than 15 years as a licensed New York State real estate seller, I believe and recognize that there are at least four possible trends and pricing possibilities. With that in mind, this article will briefly attempt to consider, examine, review, and discuss 4 of these related to the residential housing market.
1. Will it continue to rise, at or near the current rate?: Most doubt that house prices will continue to rise, at this rate, for an extended period of time, in the future! Many factors created, in a way, a perfect storm, related to what we have witnessed, for about a year now! Emotional stress and worries, emulating from this horrible pandemic, the desire to make certain lifestyle changes, and the desire to avoid, delay, as well as near record low mortgage interest rates have all contributed, as well as, in certain popular geographic areas/regions, supply and demand issues that, creating a seller’s market, have accelerated this process and results!
2. Keep going up, but at a slower, more gradual pace?: Could they continue to raise prices, but more gradually? At some point (and many, I think, have already started, attesting to, some evidence) many potential and qualified buyers will be put off, and if this is coupled with, more homeowners will try to collect and sell. the pace will certainly be slower!
3. Will prices level off?: How far will the potential cooling of this market go? Will we see prices stabilize and over a period (adjustment period) make prices more stable and even? When interest rates do eventually rise, as it seems likely to in 2022, what will that affect prices and perceived costs, because higher rates mean higher monthly payments, etc.?
4. Will prices decrease, and if so, why and for how long?: Since the prices went up so fast and so much, could they decrease at some point? Although, historically, home prices rise with inflation, this increase was not significantly related to inflation! While it is possible we will see a decline, most believe it will probably level off and turn around, more like what we witness, historically, so any period of price decline will most likely be somewhat short!
Since, for most, your home represents your single largest financial asset, doesn’t it make sense that potential homeowners/buyers become better informed consumers? Will you pay more attention to possibilities and realities?