One of the questions I get the most is, what are home prices gonna do? It is such a difficult question to answer and no one has a crystal ball! With that said, I can share with you some current factors that impact price.
We have an inventory problem. In real estate, we use a term called supply. You will hear a realtor say, we have 30 days supply. Simply put, it means that all homes currently listed on market would sell in 30 days given the current demand for homes. We currently have 14 days supply, a healthy market is around 4 months supply. So we have more buyers than sellers. This is a key component for prices rising and falling.
Macro Economic Conditions
We have 40 million unemployed. That is a scary number. what we don’t have clear line of sight on is how many of these people are home owners and if they are behind in their mortgages. The verdict is still to early, if we see any significant foreclosures or distressed sales, then we will see Inventory rise and if more units hit the market than demand then we will see home prices drop. To be clear, economists who study this do not foresee any meaningful movement in pricing and project home prices to go up in 2021.
If you have any questions, do not hesitate to reach out!