Given that we have experienced, perhaps, one of the longest and most abrupt price increases, in house prices, many seem to wonder if this will continue and, if so, for how long, and then what! Given that historically property prices fluctuate and it is often challenging to accurately predict trends and certainly there is no such thing as a crystal ball, when it comes to making these predictions, it is wise to try avoid any marketing attempt: time! After more than 15 years as a licensed real estate seller in New York State, I believe and acknowledge that there are at least four possible pricing trends and possibilities. With this 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 increase, at or near the current rate ?: Most doubt that property prices will continue to rise, at this rate, for an extended period in the future! Many factors created, in a way, a perfect storm, related to what we have witnessed, for about a year! The emotional tensions and worries, which emulate this horrible pandemic, the desire to make certain lifestyle changes and the desire to avoid, delay, as well as the near-record mortgage interest rates, have contributed, in addition to, in certain popular geographic areas / regions, supply and demand, issues that created a seller’s market, have accelerated this process and results.
2. Continue climbing, but at a slower, more gradual pace ?: Is it possible that prices will continue to rise, but more gradually? At some point (and many believe that we have already begun, witnessing, some testing), many qualified potential buyers will be discouraged and, if this is combined with, more homeowners, trying to collect and sell, the pace will undoubtedly will slow down!
3. Will prices level off ?: How far will the potential cooling of this market go? Will we see prices, level off, and over a period (adjustment period), will we make prices more stable and uniform? When interest rates eventually rise, as it seems they will probably happen in 2022, what will that do to prices and perceived costs, because higher rates mean an increase in monthly payments, etc.?
Four. Will prices decrease and, if so, why and for how long ?: Since prices went up so fast and so much, could they ever decline? 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 that it will probably stabilize and turn, more of what we have witnessed, historically, so any period of price decline will most likely be somewhat short.
Given that, for most, their home represents their largest individual financial asset, doesn’t it make sense for potential homeowners / buyers to become better-educated consumers? Will you pay more attention to the possibilities and realities?