3 Reasons Why Home Prices Might Stay High

Here’s what you need to know about the future of home prices. 

For those who have been religiously monitoring the market, you’re probably wondering: Are home prices going to fall? With home sales down in this market, sellers are anxious about potential price drops, while buyers are hopeful for a decrease. However, a price drop doesn’t seem likely anytime soon. Most economists and experts predict that home prices will likely increase by anywhere from 3% to 6% in 2024.

But why aren’t prices coming down? There are three key factors at play:

1.  Low inventory. Although homes are more expensive, the demand for them is still high. Higher interest rates have also caused home sellers to stay in their homes longer, and our typical seasonal surge of inventory just isn’t happening right now. Low supply is good news for homeowners because it will keep your property values up.

2. Rising rent. One often overlooked factor in all of this is rental rates. While housing prices boomed during the pandemic market, the same thing happened to rentals. The average rental in the U.S. is 30% higher than it was before the pandemic boom. As rental rates increase with inflation, locking in your monthly payment and owning a home becomes more attractive. 

"Most economists and experts predict that home prices will likely increase by anywhere from 3% to 6% in 2024."

3. Limited new construction. The housing crash in 2008 led many builders to halt construction, creating a shortage of new homes. While construction starts are up, it will take time to catch up to demand.

While we cannot know for sure what will happen, home prices are unlikely to fall significantly. If you have questions about your home's value or homeownership, don't hesitate to reach out. You can call, text, or send us an email. We're here to help.