Will our market crash? Let’s look at the factors that drive real estate.
Is this market going to crash? It seems like a logical question; we’ve had a hot market for so long. Before we can answer this, we have to look at the fundamentals of what drives real estate. Do people have jobs, is money available, and are there homes available to buy? Underlying all of that is the basic principle of supply and demand.
We have had a sustained period where more people want to buy than there are homes available. This is based on population change mostly; millennials have just hit their peak, home-buying years. They’re a massive generation of 80 million people, so we have a home deficit.
“Fundamentally, we do not have a crash looming.”
Compounding that, the number of new construction homes has lagged below our traditional pace for the last 11 years. We would usually have a lot more new construction homes in the market.
Buyers have to start saying that they aren’t willing to pay the high prices for the market to correct itself. When that happens, we will see a shift, but we haven’t seen any signs of that happening. The amount of inventory is still low, and homes are still selling at a rapid pace.
Fundamentally, we do not have a crash looming. Will we see the market cool off? Yes, we might, and that would be a positive. The market can’t go up forever; eventually, the buyers will back off.
For 2022, we expect to see between 4% to 7% appreciation, and the market will be similar to what we had in 2021. If we can help you wade through the market and understand how this applies to your situation, we’re happy to help. Just give us a call or send us an email. We’d be happy to talk to you.
