Housing Shortage Continues
Potential buyers hoping that home prices will plummet, like they did during the Great Recession, are likely going to be disappointed. With demand outpacing supply, there simply aren’t enough homes being built to satisfy the multitude of buyers. The up-and-coming generation’s desire for single-family homes in which to raise their growing families, means there isn’t likely to be a drop-off in demand anytime soon. In addition, the housing shortage may be fueled by worried would-be sellers deciding to postpone listing until they can get top dollar for their properties.
Ability to Buy
Although a lack of homes for sale typically drives up prices, that effect could be mitigated if there are fewer folks who can afford to buy particularly if a recession affects the ability to find a good-paying job or steady freelance work. Ali Wolf, director of economic research at Meyers Research, a national real estate consultancy notes that moving “from a two-income household to a one-income household doesn’t change the desire to own. But it does impact the ability.”
Home Price Forecast
Realtor.com believes prices will flatten, but likely not fall. Meanwhile, the number of home sales will also remain flat or potentially even dip. Other economists expect the recession could have a bigger toll on housing, expecting prices to fall marginally, anywhere from ten to twenty percent. The priciest parts of the country, which saw the biggest price hikes, could see the biggest price corrections. Sales could decline anywhere from 10% to 20%, Wolf predicts, with the luxury market is already seeing price decreases. Of course, much of this depends on mortgage interest rates, which are at historically low levels. If they continue to stay low, it could give the housing market a boost, since low rates translate into lower monthly mortgage payments.
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