If you’ve been watching the real estate market, you’ve probably seen that it just continues to go up. There has been tremendous growth over the last year, and it’s not clear when that growth is going to end.
But why is this happening? With some people facing employment issues, coming off of a down year economically, why do the prices keep climbing? Shouldn’t they fall if people cannot afford to buy homes?
The demand is higher than the supply
There are a lot of factors to consider with something as complex as this, but one reason is simply that inventory is very low. When not a lot of people are selling, the supply can be far lower than the demand. If there are more people looking to buy than looking to sell, the prices are going to climb, even if there are fewer buyers than there were in previous years. Everything that does hit the market fetches a premium because buyers need to make an offer somewhere.
This is also why we’ve seen a lot of bidding wars and homes that are moving faster. In previous markets, homes would sit on the market for months and potential buyers would try to negotiate lower prices. Now, you often have buyers competing against each other and bidding up over the asking price. It’s just very different with fewer homes to choose from.
Making smart moves in the current market
If you’re looking to buy or sell, knowing what the market is doing is important, but you also need to know what legal steps you may need to take to protect your interests. Things are fast-paced in the real estate market and you do not want to make any critical errors that could negatively affect your financial future.