Why Aren’t Home Prices Crashing?

​

There have been a lot of shifts in the housing market recently. Mortgage rates rose dramatically last year, impacting many people’s ability to buy a home. And after several years of rapid price appreciation, home prices leveled off to a degree in our area. These changes led to a rise in headlines saying prices would end up crashing.

Even though we’re no longer seeing the huge buyer frenzy that drove home values up during the pandemic, prices have been relatively flat at the national level. But when a home is priced well, multiple offer scenarios are still very common in the Jersey shore real estate market.

​

You might think sellers would have to lower prices to attract buyers in today’s market, and that’s part of why some may have been waiting for prices to come crashing down. But there’s another factor at play – low inventory.

​

As you can see in the graph below, we’ve been at or near record-low inventory levels for a few years now.

​

                    Months' Inventory of Homes for Sale

                      2011-Today

​

​

​

​

​

​

​

​

​

​

​

​

That lack of available homes on the market is putting upward pressure on prices. Bankrate puts it like this:

“This ongoing lack of inventory explains why many buyers still have little choice but to bid up prices. And it also indicates that the supply-and-demand equation simply won’t allow a price crash in the near future.”

If more homes don’t come to the market, a lack of supply will keep prices from crashing, and experts do not forecast inventory levels rising significantly this year.

Sellers are under no pressure to move since they have plenty of equity right now. That equity acts as a cushion for homeowners, lowering the chances of distressed sales like foreclosures and short sales. And with many homeowners locked into low mortgage rates, that equity cushion isn’t going anywhere soon.

With so few homes available for sale today, homebuyers need the expertise of an experienced realtor more than ever. If you’re in the market to buy or sell, contact me today so we can start to develop the best strategy for you to reach your home ownership goals.