Are Housing Prices Going Down in 2021?
Are Housing Prices Going Down in 2021?
I have heard many perspective buyers say they are waiting on the sidelines until prices go down. Or that prices are getting too expensive. It seems that timing the real estate market has become a new national past time…
But is the real estate market really going down in 2021 or heck even 2022?
It’s always important to remember that real estate is local. So, while the national market could continue to see gains, there could be some specific markets where home prices go down due to local issues. In this case we are talking about the National market.
So, will the market go down in 2021 or even 2022?
It’s not going to happen. And there are a multitude of reasons why.
Let’s first start with the imbalance of housing supply to demand. Demand is far outstripping supply. The level of demand will subside. This level of imbalance will not continue. It’s my belief that demand will decrease due to increased interest rates and/or buyer fatigue. But that decrease in demand will not turn into a slump.
Freddie Mac recently stated that the U.S housing market is 3.8 million single-family homes short of what is needed to meet the country’s demand.
Why the shortage? The chief economist at Freddie Mac is quoted as saying “That is what you get when you under build for 10 years”.
So, what does this have to do with prices? Even if demand subsides a bit, we will continue to see an imbalance in the supply and demand curve for housing due to underbuilding.
It’s true, we are building more houses. Last year single family home starts rose to 991,000 units. Which isn’t bad. That is actually the highest rate since 2007. But in order for home builders to meet long term demand, they need to be constructing between...