WHY ARE HOUSING PRICES STILL ON THE RISE?

Buyers are stunned as they look over the inventory of available homes on today's market and wonder, "Why are housing prices still on the rise?"  

There are three factors which contribute to the continued increase in housing prices in 2024, so, lets look at three key factors.

In no particular order:

1. Inflation: Despite the best efforts of the Fed they have yet corralled the fluctuating inflation. Home buyers and sellers, who will later become home buyers, see this as a sticking point. The cost of goods and services rises in the face of the best efforts of the Fed to bring inflation down to a sustained 2%. 

2. Interest rates: A close cousin to inflation is the wobbly 30-year fixed rate mortgage.  Many buyers look at 7% and withdraw into a cocoon.  Younger buyers have never experienced mortgage rates in the mid to high teens like folks in the 1980s.  They retract in system overload.

3. Inventory: Okay, lets get down and dirty for a few moments and agree that the lack of inventory across the market is the "elephant in the room".  For all the reasons cited above sellers are comfortable in their 0-3% mortgage rates and don't see a pressing need to jump into the buying market that is 4% higher than their current mortgage.  

Bottom Line: Hope springs eternal and just as the sun rises in the East there will be a correction in the housing market which will see an increase in existing home sales and new home construction.  The opportunist who looks around the curve can and will see the signs of a change and reacts accordingly.