Is Housing Supply Meeting the Demand?

housing-supply-demand

Many real estate conversations revolve around the in house values over the last four years. Some are concerned about another housing bubble. However, the recent increase in prices can be attributed to a very simple principle: supply and demand.

DEMAND

Demand for single-family housing has continued to increase as the economy slowly recovers. Recent surveys have shown over 80% of each generation view homeownership as a part of the American Dream. A recent Gallup survey showed Americans still believe real estate is the best long-term investment.

SUPPLY

Over the last several years, many homeowners were unable to put their homes on the market for different reasons (family finances, no or limited equity in the home). There has been a pent-up number of sellers who have wanted to move but couldn’t. This graph illustrates the number of years families have historically stayed in a home. As you can see, we’ve reached a point of pent-up seller demand.

seller-demand

As the economy improves and more families reach the point of significant equity (20% or more), we will see these homes come to market. As supply matches demand, the acceleration of home price increases will begin to slow.

Real Estate Bottom Line

If you are one of the many families who have not been able to list your home for sale over the last 5-7 years, now may be the time to get a good price and move on to find your next dream home.

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