Supply and Demand in the Housing Market
There is a high demand in homes but severely limited supply of them. The prices of homes are accelerated by the concept of supply and demand – the strong year-over-year home price appreciation is simple to explain. Demand is increased due to historically low interest rates.
Some of the factors that can affect the housing market supply include:
- Household incomes – The more or less people earn generally increases or decreases the housing prices. If there is lower income, the housing demand and prices usually go downwards.
- Jobs – As jobs move into a city, town, or state, it usually dictates positive inward migration, income and demand increases. If there are net job loss in the area, it may prompt people to move and find new employment elsewhere, increasing the housing supply and decreases the demand.
- Household debt – The more consumer debt that is had, the less likely apply for a home loan will be feasible. It is often that people will choose to pay down their debt prior to purchasing a home.
- Policy – Local and state-level legislation and rules can have a dramatic impact on housing market supply and demand. Tax incentives and low fees may make building, developing, and owning a home more appealing to consumers.
Reports by realtor.com indicated that there is a monthly change in inventory levels and that as of last month, we saw inventory increase slightly in 39 of the 50 states. This may be because more and more people are getting vaccinated and we see a shift of normalcy, resulting in homeowners being more comfortable to sell their home.
If you’re in the market to sell, now is a great time to do so. If you’re in the market to buy, it’s also a great time to do that – hang tight for this wild but exciting ride!
All information provided in this publication is for informational and educational purposes only, and in no way is any of the content contained herein to be construed as financial, investment, or legal advice or instruction. CrossCountry Mortgage, LLC (“CrossCountry”) does not guarantee the quality, accuracy, completeness or timelines of the information in this publication. While efforts are made to verify the information provided, the information should not be assumed to be error free. Some information in the publication may have been provided by third parties and has not necessarily been verified by CrossCountry.