I believe the real estate market has been one of the most talked-about topics in recent years. With the ongoing pandemic and economic uncertainty, many experts predicted that home prices would crash. However, as we head towards the end of the first quarter of 2023, it's evident that this prediction has not come to pass. Let’s explore some of the reasons in my blog why home prices aren't crashing.
The demand for homes has been increasing over the past few years, especially in the wake of the pandemic. Remote work and the desire for more space have prompted many people to move out of cities and into the suburbs. However, the supply of homes hasn't kept up with the demand. According to the National Association of REALTORS®, there is currently a 2.7-month supply of homes on the market, which is well below the six months considered to be a balanced market. The low supply of homes has led to increased competition among buyers, which has driven up prices. The U.S. economy has been recovering since the pandemic-induced recession of 2020. The labor market has been steadily improving, and the stock market has been hitting record highs. As a result, many people have more money to spend, which has increased demand for homes. The economic recovery has also led to more confidence among buyers, who are willing to pay higher prices for homes.
The government has implemented several policies to help homeowners and stimulate the real estate market. For example, the CARES Act provided forbearance options for homeowners who were struggling to make mortgage payments due to the pandemic. Additionally, the government has provided tax incentives for homeownership, which has encouraged more people to buy homes. Inflation has been on the rise, which has increased the value of assets such as homes. Many investors are turning to real estate as a hedge against inflation, which has driven up demand and prices.
Moreover, there are several reasons why home prices aren't crashing. High demand and low supply, economic recovery, government policies, and inflation are all contributing factors. While some experts still believe that a crash could occur, it's important to keep in mind that the real estate market is complex and influenced by many factors. As always, it's crucial to consult with a real estate professional like me when making decisions about buying or selling a home.