|Are You the Reason Home Prices are Increasing; Waiting for the Top?Accuweather in Lake Arrowhead December 4, 2017 Issue 287|
There are many unsubstantiated theories as to why home values are continuing to increase. From those who are worried that lending standards are again becoming too lenient (data shows this is untrue), to those who are concerned that prices are again approaching boom peaks because of “irrational exuberance” (this is also untrue as prices are not at peak levels when they are adjusted for inflation), there seems to be no shortage of opinion.
However, the increase in prices is easily explained by the theory of supply & demand. Whenever there is a limited supply of an item that is in high demand, prices increase.
It is that simple. In real estate, it takes a six-month supply of existing salable inventory to maintain pricing stability. In most housing markets, anything less than six months will cause home values to appreciate and anything more than seven months will cause prices to depreciate (see chart 1).
Month after Month Listed Inventory Drops Pushing Prices Up
DO YOU THINK YOU CAN TIME THE TOP?
According to the Existing Home Sales Report from the National Association of Realtors (NAR), the monthly inventory of homes has been below six months for the last four years (see chart 2).
BOTTOM LINE: Waiting until after the holidays and cold winter days to sell your home is trying to time the top dollar. Spring will bring more listings, more competition and more risk.
Coldwell Banker Sky Ridge Realty, Lake Arrowhead CA, 92352-1089 Since 1982.