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What Do Supply and Demand Tell Us About Today’s Housing Market?

What Do Supply and Demand Tell Us About Today’s Housing Market? | MyKCM

There’s a well-known economic theory – the law of supply and demand – that explains what’s happening with prices in the current real estate market. Put simply, when demand for an item is high, prices rise. When the supply of the item increases, prices fall. Of course, when demand is very high and supply is very low, prices can rise significantly.

Understanding the impact both supply and demand have can provide the answers to a few popular questions about today’s housing market:

  • Why are prices rising?
  • Where are prices headed?
  • What does this mean for homebuyers?

Why Are Prices Rising?

According to the latest Home Price Insights report from CoreLogic, home prices have risen 18.1% since this time last year. But what’s driving the increase?

Recent buyer and seller activity data from the National Association of Realtors (NAR) helps answer that question. When we take NAR’s buyer activity data and compare it to the seller traffic during the same timeframe, we can see buyer demand continues to outpace seller activity by a wide margin. In other words, the demand for homes is significantly greater than the current supply that’s available to buy (see maps below):What Do Supply and Demand Tell Us About Today’s Housing Market? | MyKCMThis combination of low supply and high demand is what’s driving home prices up. Bill McBride, author of the Calculated Risk blog, puts it best, saying:

“By some measures, house prices seem high, but the recent price increases make sense from a supply and demand perspective.”

Where Are Prices Headed?

The supply of homes for sale will greatly affect where prices head over the coming months. Many experts forecast prices will continue to increase, but they’ll likely appreciate at a slower rate.

Buyers hoping to purchase the home of their dreams may see this as welcome news. In this case, perspective is important: a slight moderation of home prices does not mean prices will depreciate or fall. Price increases may occur at a slower pace, but experts still expect them to rise.

Five major entities that closely follow the real estate market forecast home prices will continue appreciating through 2022 (see graph below):What Do Supply and Demand Tell Us About Today’s Housing Market? | MyKCM

What Does This Mean for Homebuyers?

If you’re waiting to enter the market because you’re expecting prices to drop, you may end up paying more in the long run. Even if price increases occur at a slower rate next year, prices are still projected to rise. That means the home of your dreams will likely cost even more in 2022.

Bottom Line

The truth is, high demand and low supply are what’s driving up home prices in today’s housing market. And while prices may increase at a slower pace in the coming months, experts still expect them to rise. If you’re a potential homebuyer, let’s connect today to discuss what that could mean for you if you wait even longer to buy.


Posted on October 12, 2021

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Fall in love with the unbeatable location and thoughtful improvements of this beautifully renovated 4-bed, 2-bath Mill Creek home!

This home features a brand new HVAC, new luxury vinyl plank and carpet flooring, a private first-floor primary suite with bay windows and neighboring first-floor laundry, and a light-filled open-concept main living area with a cozy wood-burning fireplace!

Utilize the spacious fourth bedroom as a primary bedroom with a walk-in closet, a home office, and/or a recreation room, and enjoy the ample closet space each bedroom provides!

Prepare meals in the freshly painted eat-in kitchen or grill out more casually on the sunny back deck!

Wave to neighbors from the rocking chair front porch or soak in the private wooded views from the picturesque screened-in sun room, all while allowing your pet to roam free in the fenced-in backyard! Utilize the two sheds, one with electric, and the bedroom eaves for ample storage space!

📍 Beautifully situated on a quiet cul-de-sac featuring ample street and flat driveway parking, this home is conveniently located within walking distance to Biscuit Run Trail and a short, 2-minute drive to Mountain View Elementary and Monticello High/Tandem Friends Schools. Less than an 8-minute drive to 5th St Station (Wegmans, Alamo Theater, restaurants, etc!) and a 10-minute drive to downtown!

Ready to start the next chapter in your story? Showings begin by appointment Friday, February 3rd! 🎉 Email showings@storyhousere.com with any questions and/or interest!

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For a full day dedicated to one of the very best and most delicious drinks, the only way to celebrate is with a visit to This Local Love ❤️ of ours, @mariebettecafe!

Make sure to visit their account to view their full hot chocolate month schedule and see all the amazing varieties they are offering during the month of February!

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    February is just around the corner which means that over 80% of people have already abandoned their new year’s resolutions. Our article on “7 Steps to Achieve Your Goals” details all the best ways to keep your new year’s resolutions going all year long. 

✔️ Identify your goal
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✔️ List obstacles
✔️ Identify people
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✔️ List benefits

Read the full Sincerely, Story House blog by clicking the top link in our bio!

If you liked these 7 tips and are looking for more, make sure to register for Sasha’s upcoming webinar, From Vision to Action!

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https://bit.ly/visiontoaction2023

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Have questions about real estate that are puzzling you? Ask away, we have the answers!

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