Realty Executives Phoenix
Denise van den Bossche
Denise van den Bossche
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With home prices at a new record high and homes flying off the market in hours in some cases, it’s no wonder that Google searches for “when is the housing market going to crash” have spiked dramatically in recent weeks. After all, the mania seems reminiscent of the run-up to the housing bubble in the mid-2000s—and we’ve all been told that what goes up must eventually come down.
However, housing is likely to keep defying common sense. Experts say there’s no reason to prepare for a crash landing like we experienced in 2008 and 2009. This time around, the reason for the out-of-control prices is simply that there are many more buyers than there are properties for sale. Another simple rule: Prices rise when there is more demand than supply. Crazy, it seems, is the new normal.
“I find it difficult to say we’re not in a housing bubble, but I [also] find it difficult to say home prices are going to crash,” says Ali Wolf, chief economist at building consultancy Zonda.
“Today’s prices feel unsustainable, today’s frenzy feels unsustainable. But that doesn’t mean there’s going to be a crash. That’s bad news for a lot of shoppers who are hoping for prices to come down.”
Nationally, median home list prices shot up 17.2% year over year in April, to hit a new record high of $375,000, according to Realtor.com® data. Meanwhile, incomes haven’t risen anywhere near as much.
Still, “There are a lot of people sitting on the sidelines desperate to buy a home,” says Wolf. “If the market stabilizes, there are a lot of [buyers] who are going to come out of the woodwork to soften the blow.”
What’s more likely to happen is that, over the next year or two, prices will continue to rise, but at a much slower pace. Bidding wars will taper off, and the astronomical offers over asking price will eventually come down.
But that doesn’t mean prices will return to their pre-pandemic levels. List prices are expected to continue rising to meet sale prices, but the annual increases won’t be nearly as brutal.
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Denise has been a licensed agent in the Phoenix-Scottsdale Valley since 1985. Her husband and life-partner of over 20 years, Patrick, is President of Realty Executives International supporting over 550 offices worldwide. Contact at email@example.com
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