What Will It Take for Prices To Come Down?

Are Home Prices Going to Crash? Here's What You Need to Know

You may be wondering if home prices are going to crash. And believe it or not, some people might even be hoping for this to happen so they can finally purchase a more affordable home. But experts agree that’s not what's in the cards – and here’s why.

Prices Depend on Supply and Demand

The housing market operates like any other market – when demand is high and supply is low, prices rise. Currently, there are more people who want to buy a home than there are homes available to purchase. This imbalance is the driving force behind today’s elevated home prices.

According to recent estimates, the U.S. faces a housing shortfall of several million homes. That means there are far more buyers (demand) than available homes for sale (supply). This mismatch is why home prices aren’t expected to drop at the national level anytime soon. As David Childers, President of Keeping Current Matters (KCM), explains:

“The main driving force on pricing is the limited amount of inventory in most markets across the country. That issue is not going to be solved overnight or in the next twelve months.”

How Did We Get Here?

For over 15 years, homebuilders haven’t been building enough homes to keep up with buyer demand. After the 2008 housing crisis, new construction slowed significantly, and it’s only recently started to recover:

Even with construction increasing in recent years, builders are still playing catch-up. According to AmericanProgress.org, they’re not meeting today’s demand, let alone addressing years of underbuilding. This ongoing shortage ensures that home prices remain steady or continue to climb in most areas.

What About Next Year?

Looking ahead, most experts agree that home prices will keep rising in 2024, but at a slower and healthier pace. However, it’s important to remember that price trends vary by market. If your local area has more available inventory, prices might grow more slowly or even dip slightly. On the other hand, areas with tighter inventory are likely to see prices continue to increase.

That’s why it’s essential to work with a local real estate expert who understands the unique dynamics of your market. They can help you navigate these trends and make informed decisions based on what’s happening in your area.

Bottom Line

If you’re wondering what it will take for home prices to come down, it all boils down to supply and demand. With inventory still limited in most markets, prices are likely to remain steady or rise.

Want to know what’s happening with home prices in our area? Let’s connect. Together, we can discuss your goals and create a plan that works for you.