You might be curious about whether home prices are going to drop. Some folks may even be hoping for a crash so they can snag a home at a more affordable price. However, experts are on the same page, and they don’t see this happening anytime soon. Here’s the reason behind their outlook.

There are more people looking to buy homes than there are homes for sale, and that's what's causing prices to rise.

Let’s take a closer look at why, on a national level, home prices are unlikely to decrease in the near future.

Prices Depend on Supply and Demand

The housing market operates like any other market: when there are more buyers than available homes, prices tend to go up.

Recent estimates show that the U.S. is short several million homes. In simple terms, there are a lot more people wanting to buy a home than there are homes available. This gap between demand and supply is a major reason why we’re not likely to see a drop in prices nationally. As David Childers, the President of Keeping Current Matters (KCM), explains:

““The main driving force on pricing is the limited amount of inventory in most markets across the country. That issue is not going to be solved overnight or in the next twelve months.”
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— David Childers, President of Keeping Current Matters (KCM)

How Did We Get Here?

For more than 15 years, homebuilders have struggled to keep up with the demand for homes. After the housing crisis in 2008, the pace of homebuilding dropped significantly, and only recently have we begun to see signs of recovery.

Despite the increase in new construction in recent years, builders are still trying to catch up. According to AmericanProgress.org, they're not quite matching today’s demand and haven't made up for the years of underbuilding.

As long as there's a shortage of homes, we can expect home prices to either stay steady or go up in most areas.

What About Next Year?

Most experts believe that prices will continue to rise next year, but they expect the increase to be at a much slower and healthier rate.

Home prices can really differ from one market to another. What you see happening on a national level might not be the same as what’s going on in your area. If there’s more inventory available locally, you might find that prices are increasing more slowly or even dropping a bit. On the other hand, if inventory is tight in your area, prices are likely to continue rising, which is the trend in many places across the country. This is why it’s so important to connect with a local real estate expert who knows your market and can help you understand the situation where you live.

Bottom Line

If you're curious about what it would take for prices to drop, it really boils down to supply and demand. Since inventory is still limited in many markets, prices are expected to stay stable or even go up.

Let's connect to check out the current home prices in our area. I can help you understand the market and create a plan that suits your needs.