What It Means When Prices Keep Rising
If you’re in search of a new luxury home, you’ve probably noticed the increased prices in the housing market. You may be wondering why these prices have increased so sharply and what the rising prices mean for you and your family. World Ranked Broker, Terrie Cox, RE/MAX Equity Group has years of experience buying and selling luxury homes in Washington and Oregon and shares insights on the effects of the increased housing prices.
Why Have Prices Increased?
The main reason that housing prices have increased so dramatically is a simple supply and demand problem where there are too many interested buyers and too few properties or sellers.
The housing market has experienced an unprecedented shortage of homes for sale. This began even before the COVID-19 pandemic but has been exacerbated by the virus by making people reluctant to sell and show their homes. This means that there are fewer properties for sale, and the ones that are often getting multiple offers, even over the asking price. People are also staying in their homes for longer, which leads to fewer turnovers of existing homes.
Construction of new homes has started to increase as the weather improves and COVID slows, but the demand is so great that builders can’t keep up. As the supply increases, home prices will gradually moderate, but it’s unlikely that they’ll experience a broad decline. Experts predict that in the next few years, there will still be a tight housing supply, and therefore buyers won’t experience much relief from high housing prices.
Low Mortgage Rates
In recent months, record-low mortgage rates have sparked a surge in home purchases because the average buyer can afford a larger loan or save money on their home loan. The cost of borrowing money to buy a property decreases as mortgage rates decline. They have been progressively declining for some time but dropped substantially in 2020. These low mortgage rates are helpful to buyers so they can keep up with soaring costs, but they also further drive home prices up because they cause an increase in demand.
Results of Increased Prices
The increased prices in the housing market have led to a few effects that may affect your journey to buying or selling your home.
If you’re looking to sell your home, now is a great time. Since demand for properties is high, sellers are currently in a good position to sell their homes and will be for a while.
If you’re looking to buy, don’t lose faith because the market may soon see the signs of a return to a more balanced real estate market. This is because prices have risen so sharply that buyers are retreating and home sales are slowing. Top Broker Terrie Cox, RE/MAX Equity Group can help you with all your questions and concerns whether you’re buying or selling.
Decreased Home Ownership
Another effect of the vastly increased housing prices is decreased homeownership. The number of Americans who own homes has been decreasing. According to Laurie Goodman at the Urban Institute, if it continues at the same rate over the next 2 decades, the US homeownership rate will decline from 64.7 percent to 62.1 percent. These losses will disproportionately affect African-Americans and young people and will further exacerbate existing inequities since homeownership is one of the best ways to build wealth.
Learn More About the Luxury Housing Market in Washington and Oregon
If you’re looking to buy or sell a home, trust Top Broker Terrie Cox, RE/MAX Equity Group to exceed your expectations. She has served the Oregon and Washington areas with a wealth of market knowledge and experience buying and selling luxury homes for many years. Learn more about buying or selling by contacting Terrie Cox, RE/MAX Equity Group today.