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Are Home Prices Finally Coming Down? Let’s Find Out!

Here’s what you need to know about the future of home prices. 

With the recent substantial increase in mortgage interest rates, many homeowners have been asking, “Will this finally cause home prices to drop?” The answer isn’t cut and dry. In a market where rates are predicted to rise even further this year, buyer affordability could take a serious hit. To give you a better idea of whether your home is expected to lose value in the coming months, I’m going to address three key points that are currently keeping home prices high.

1. Low inventory. Fewer homes in the market means that the demand for housing is high despite the increase in home prices. Aside from that, higher interest rates have also caused some sellers to hold on to their homes a little bit longer. Lastly, our typical seasonal surge of inventory just isn’t happening as expected right now. Despite its negative effects, low supply is good news for homeowners because it will keep their property values up.

2. Increased rental rates. One often overlooked factor in all of this is rental rates. As homeownership becomes more expensive and more out of reach for some buyers, rental demand is only going to increase, which means that rent prices will jump up as well.

"In a market where rates are predicted to rise even further this year, buyer affordability could take a serious hit."

3. Fewer new homes. There have been fewer new homes in our market since the 2008 crash. Essentially, builders were extremely cautious about building too many new homes and flooding the market like what happened during the last crash. As a result, new home projects have only just now started to catch back up with higher demand. This means supply will remain low in our market for a while, which will keep home prices high.

Although rising rates are going to cause some buyers to leave the market, all of the evidence we’ve seen on the ground points to home values continuing to rise as long as supply remains this low. This is good news for you if you’re thinking about selling. In the meantime, call, text, or email for more information; we look forward to hearing from you.

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