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Why are home prices staying so high?

On Behalf of | Apr 25, 2024 | Real Estate Law

When looking at the real estate market, it’s clear that home prices have gone up in recent years, and they haven’t come back down. Some homes have nearly doubled or tripled in value in the last decade. In some areas, these prices are still climbing or at least staying stagnant.

But why aren’t they going down? Many people will claim that they can’t afford real estate in the current market. But shouldn’t that drive the prices of those homes down?

Limited supply

The problem is often that there is just limited supply. This happens for a variety of reasons, such as older people not wanting to sell their homes and move out of them, keeping those homes off of the market for decades. It also happens because corporations and businesses have been buying up all of the homes in the United States. They can afford to pay more than the average consumer, so this artificially increases the “value” of the homes.

Overall, though, this limited supply just means that most people who are in the market right now aren’t going to see a reduction in home prices in the near future. If interest rates go down or there are other such financial changes, that could make homeownership a bit more affordable. But without an actual influx of homes to meet the high level of demand, the prices for the limited properties on the market will stay high.

A complicated time for buying and selling

This dynamic of high demand and low supply has made it a very complex time to buy or sell real estate. Prices have changed quickly and it will be very interesting to see what they do in the future. Those involved in such transactions need to carefully consider what legal steps to take to make things go smoothly.