What Will It Take for Prices To Come Down?

<article class="post-1298071 post type-post status-publish format-standard has-post-thumbnail hentry" id="post-1298071"><span class="entry-date">December 10, 2024</span><div class="entry-header center-block text-center"><h1 class="entry-title">What Will It Take for Prices To Come Down?</h1><div class="shareBlock"><div class="shareTitle">Share</div><div class="shareIcons"><a aria-label="Twitter Share Link" class="twitter solid display-inline-block" data-tracking="Post,Social Post Link Clicked,Twitter" href="http://twitter.com/share?text=What+Will+It+Take+for+Prices+To+Come+Down%3F&amp;url=https%3A%2F%2Fgilliggroup.com%2Fblog%2Fwhat-will-it-take-for-prices-to-come-down%2F" target="_blank"><span class="force-hidden">Twitter</span></a>
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</div></div><div class="post-tax post-category"><span></span><a href="../category/realtor-blog/index.html" rel="tag">Realtor Blog</a></div><div class="post-tax post-post_tag"></div></div><div class="entry-content"><div><img alt="What Will It Take for Prices To Come Down? Simplifying The Market" decoding="async" loading="lazy" src="https://files.keepingcurrentmatters.com/KeepingCurrentMatters/content/images/20241205/20241210-What-Will-It-Take-for-Prices-To-Come-Down-original.png" style="display: block; margin-bottom: 5px; clear: both; max-width: 100%;" width=""/>
<p>You may be wondering if home prices are going to <a href="https://www.simplifyingthemarket.com/2024/11/25/why-todays-mortgage-debt-isnt-a-sign-of-a-housing-market-crash/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank">crash</a>. And believe it or not, some people might even be hoping this happens so they can finally purchase a <a href="https://www.simplifyingthemarket.com/2024/11/21/dont-miss-out-on-the-growing-number-of-down-payment-assistance-programs/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank">more affordable</a> home. But experts agree that’s not what’s in the cards – and here’s why.</p>
<p><strong><em>There are more people who want to buy a home than there are homes available to purchase. That’s what drives prices up.</em></strong></p>
<p>Let’s break that down and explore why, nationally, home prices aren’t going to be coming down anytime soon.</p>
<h4><strong>Prices Depend on Supply and Demand</strong></h4>
<p>The housing market works like any other market – when demand is high and supply is low, prices rise.</p>
<p>According to the latest <a href="https://www.realestatenews.com/2024/09/23/housing-market-decoded-the-housing-deficit-and-how-to-fix-it" rel="noopener noreferrer" target="_blank">estimates</a>, the U.S. is facing a <a href="https://www.simplifyingthemarket.com/2024/10/28/why-your-house-will-shine-in-todays-market/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank">housing shortfall</a> of several million homes. That means there are far more people looking to buy (demand) than there are homes for sale (supply). That mismatch is the key reason why prices won’t fall at the national level. As David Childers, President of <em>Keeping Current Matters</em> (KCM), <a href="https://www.inman.com/2024/11/21/heres-how-to-answer-todays-most-pressing-buyer-and-seller-questions/" rel="noopener noreferrer" target="_blank">puts it</a>:</p>
<blockquote><p><em>“The main driving force on pricing is the limited amount of inventory in most markets across the country. That issue is not going to be solved overnight or in the next twelve months.”</em></p></blockquote>
<h4><strong>How Did We Get Here?</strong></h4>
<p>For over 15 years, homebuilders haven’t been building enough homes to keep up with buyer demand. After the 2008 housing crisis, homebuilding slowed significantly, and it’s only recently <a href="http://www.census.gov/construction/nrc/xls/co_cust.xls" rel="noopener noreferrer" target="_blank">started to recover</a> (<em>see graph below</em>):</p>
<p><a href="https://files.keepingcurrentmatters.com/KeepingCurrentMatters/content/images/20241205/20241210-Builders-Aren-t-Overbuilding-Theyre-Trying-To-Catch-Up-original.png" rel="noopener noreferrer" target="_blank"><img alt="a graph of a number of years" decoding="async" src="https://files.keepingcurrentmatters.com/KeepingCurrentMatters/content/images/20241205/20241210-Builders-Aren-t-Overbuilding-Theyre-Trying-To-Catch-Up-original.png"/></a>Even with new construction on the rise over the past few years, builders are playing catch-up. And <a href="https://www.americanprogress.org/article/increasing-affordable-housing-stock-through-modular-building/" rel="noopener noreferrer" target="_blank">according</a> to <em>AmericanProgress.org</em>, they’re still not even keeping up with today’s demand, let alone making up for years of underbuilding.</p>
<p>And as long as there’s a housing shortage, home prices will remain steady or increase in most areas.</p>
<h4><strong>What About Next Year?</strong></h4>
<p>The majority of experts agree prices will keep rising next year, but at a much slower, healthier pace (<em>see graph below</em>):</p>
<p><a href="https://files.keepingcurrentmatters.com/KeepingCurrentMatters/content/images/20241205/20241210-2025-Home-Price-Forecasts-original.png" rel="noopener noreferrer" target="_blank"><img alt="a graph of green bars" decoding="async" src="https://files.keepingcurrentmatters.com/KeepingCurrentMatters/content/images/20241205/20241210-2025-Home-Price-Forecasts-original.png"/></a>But it’s important to note home prices vary by market. What happens nationally might not reflect exactly what’s happening in your area. If your local market has more inventory available, prices could grow more slowly or even decline slightly. But in areas where inventory remains tight, prices will keep climbing – and that’s what’s happening throughout most of the country. That’s why it’s crucial to work with a local real estate expert who understands your market and can explain what’s going on where you live.</p>
<h3>Bottom Line</h3>
<p>If you’re wondering what it’ll take for prices to come down, it all goes back to supply and demand. With inventory still limited in most markets, prices are likely to remain steady or rise.</p>
<p>To see what’s happening with home prices where you live, connect with a local real estate expert. They can help you understand your market and make a plan that works for you.</p>
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