Risk In Today’s Housing Boom
Q: Home prices seem to be going up still even during the pandemic, do you think this will continue? Will, Montclair, NJ
A: Great question, Will. Housing demand is far outpacing supply right now which is why home prices in so many places continue to rise in many local real estate markets despite the pandemic and all the economic calamity that has gone with it. In Q3 2020, half of all listed properties sold within 3 weeks down from 1 month a year before and more than ⅔ of all listings went under contract in less than 30 days. However, the basic rules of real estate ultimately supersede short term trends. Right now home price growth is outpacing personal income and that can’t and won’t last forever. Ultimately, market equilibrium will be reached where home prices and personal income are aligned–this poses a potential short term risk to home buyers who have recently purchased homes as prices have climbed during the pandemic if there is a market correction. Thanks for your question, Will.
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