Many were expecting house prices to come crashing down, much like they did in 2008. While there have been many shifts in the housing market, we have yet to see a "crash." Why could that be? What's different now? This article will explore reasons that we may not see a major drop in prices as we saw in previous years --and why you don't want to wait around for that to happen!
What we are currently seeing in the market:
While we have seen house prices drop (in some areas more dramatically than others), prices have been relatively flat nationally. Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), commented that he doesn't expect this to change:
"[House] prices will be steady in most parts of the country with a minor change in the national median home price."
Motivated sellers (driven by various reasons that require them to unload a property quickly) are the sellers most willing to drop their asking price.
However, most sellers aren't budging too much. The main reason is that inventory is low, and that's limiting just how they are willing to drop their asking price, according to Yun:
"Will some markets see a price decline? Yes. [But] with the supply not being there, the repeat of a 30 percent price decline is highly, highly unlikely."
The inventory issue:
Because there's a limited supply of available homes on the market, there's constant upward pressure on prices, which explains why homebuyers in certain markets have no choice but to bid up prices. The supply-and-demand equation won't allow a price crash this time around. That's not the case in all markets, which is why it's essential to work with local professionals.
So if more homes don't come to the market, this lack of supply will prevent the major price drop many have been waiting for in vain.
For the most part, sellers aren't under pressure to move since they have ample equity right now. That equity cushions homeowners, minimizing the chances of distressed home sales like foreclosures and short sales. And with so many homeowners locked into low mortgage rates, that equity cushion will be around for a while.
With limited homes available for sale today, working with a trusted mortgage professional and real estate agent who understands your local area and current market volatility is crucial.
If you're considering moving this spring, contact us to explore your options.