What will happen to home prices: Immediate, short term, intermediate and longer!
Since no one has yet been able to discover a crystal ball that can consistently identify future and real estate-related market trends and behavior, it makes sense for real estate professionals as well. as potential buyers and qualified sellers/owners, to better understand some of the factors that affect home prices and prices. While the price is what one lists their home for, on the market, prices are what is actually selling for! As we are currently witnessing one of the fastest growing markets (in terms of pricing), in recent memory many are asking, what does the future hold etc.? As a licensed real estate salesperson in New York State for over 15 years, I constantly caution people not to try to trade time, but rather to proceed in an informed and realistic manner, based on the specific needs and priorities and the personal situation. With that in mind, this article will attempt to briefly identify, review, consider, and discuss home prices as they relate to the current market in the short, medium, and long term.
1. Current/ Immediate: In many areas, we have witnessed, in the last 6 to 12 months, a 20% or more increase in home prices. I am amazed, in my neighborhood, the houses, I feel that they are beautiful, but not extraordinary, they sell for 1.2 million dollars and more. While those considering selling should take advantage of this, before trends, changes, potential buyers should identify whether their purchase is intended for the short or long term. Factors creating current conditions include: near-record low mortgage interest rates; post-pandemic perceptions and priorities; emotions; and desire to move, etc. How long will this continue? My guess would be, first it would slow down and then level off, and perhaps the single biggest cause could be mortgage rates! Affordability for down payments and closing costs, etc., become more of a constraint as prices rise!
two. short term: How it is defined, in the short term, is significant, in terms of determining what could be! If we take it to be about 6 months (from now) to about 3 years from now, if the economists’ forecasts are somewhat accurate, prices probably won’t rise significantly, etc.
3. Intermediate – Term: Defining the middle term, from about 3 years, to maybe 10 or more years, from now on, gets harder to predict! Will we witness another example of real estate cycles, or will they be aggressive pricing, even if rhythms don’t currently become the new normal?
4, Major – Term: For those who plan to keep their home and live there for 10 years or more, we will likely see prices based on the rate of inflation, market conditions, and specific geographic area! In other words, longer-term trends will likely return to what we consider to be historical and normal trends and trends.
Remember, this article is meant to help you more realistically consider home prices, trends, and behaviors, but there are never guarantees! Wise homebuyers must identify what they personally want and need, and why!