As a real estate agent, I often get asked if home prices are going to crash. While some buyers might be hoping for 
more affordable options, that’s unlikely to happen. There are simply more people looking to buy homes than there are homes available on the market, which keeps driving prices up.
Let’s take a closer look at why home prices aren’t expected to drop nationally in the near future:
Prices Depend on Supply and Demand
The housing market follows basic economic principles—when demand is high and supply is low, prices go up. Right now, the U.S. is experiencing a housing shortfall of several million homes. This means there are significantly more buyers looking for homes than there are properties available. That imbalance between supply and demand is the main reason why we won’t see home prices dropping at the national level.
As David Childers, President of Keeping Current Matters (KCM), puts it:
“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.”
How Did We Get Here?
For over 15 years, homebuilders haven’t been building enough homes to keep up with buyer demand. After the 2008 housing crisis, homebuilding slowed significantly, and it’s only recently started to recover
Even with new construction on the rise over the past few years, builders are playing catch-up. And according to AmericanProgress.org, they’re still not even keeping up with today’s demand, let alone making up for years of underbuilding.
And as long as there’s a housing shortage, home prices will remain steady or increase in most areas.
What About Next Year?
The majority of experts agree prices will keep rising next year, but at a much slower, healthier pace
But it’s important to note home prices vary by market. What happens nationally might not reflect exactly what’s happening in your area. If your local market has more inventory available, prices could grow more slowly or even decline slightly. But in areas where inventory remains tight, prices will keep climbing – and that’s what’s happening throughout most of the country. That’s why it’s crucial to work with a local real estate expert who understands your market and can explain what’s going on where you live.
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