The Squeeze on Home Price Appreciation

After undergoing one of the most dramatic revivals in the U.S. during the past decade, the pandemic and rising house prices have many folks talking about putting the squeeze on home prices. From Grand Rapids, Minnesota to Edwards, Colorado, the record-setting rise in home prices have triggered fresh discussion and policy debates about what, if anything, we should do next to rein in home price appreciation. Many worry that as more people borrow more than they can afford, while others are stuck renting, it could contribute to greater inequality that could take years to unwind and add to political polarization.

What is going to happen?

For many families the dream of homeownership has slipped farther and farther away. This could lead to more push back from housing advocates to temper growth, increase interest rates or more severe government action. On the other hand, home prices will continue to rise, with more moderate growth in some regions, but we shouldn’t expect to see any declines in housing prices. The migration from major metropolitan cities to more suburban and rural areas has driven price growth in these hot new housing markets. Some communities in the Southwest and Intermountain Region have reached a point where they don’t have enough materials and can’t build new homes fast enough, which is why houses in these areas are seeing the greatest price appreciation.?

We’re still in the early innings with the current housing market and it will be some time until new inventory comes online. You’re seeing limited availability in both the rental market and the home purchase market, which contributes to further price growth. The upshot of this price growth is that many people are now planning to stay where they are and reinvest in their homes, which is a very good thing.

So how can we help?

We need to do more. We need to empower everyone in real estate to be proactive in finding solutions for those who need and want our help to navigate these unique market conditions. Whether it is helping a first time home buyer write and secure a winning offer, a retirement solution for an established homeowner, or cash to finance home improvements...we need to be there and do more.

What can you do?

You need to prepare and find professionals in real estate and mortgage lending that have proven track records of working together. Then, with your team in tow, find the best solution that works for you and your family. Whether you are looking for a property to rent, looking to purchase your first home, moving up or moving down, working through a forbearance plan, starting back to work after Covid-interruptus, or just getting started, it isn't too late. Now is the best time.