Mar 22, 2021

Housing Prices - What Is Next

Housing prices are at record highs in many markets driven by high demand, very low inventory and mortgage interest rates and the price of building materials sky rocketing, which in impacting new homes prices.  Home prices are always about supply and demand.  When there are fewer sellers than buyers, prices go up.  When there are more sellers than buyers prices go down.  But the question is what is next related to home prices. 

Many economists believe that President Biden's recently enacted $1.9 Trillion Covid Relief Bill will lead to inflation because of so much money being pumped into the economy.  On the other hand, Biden is proposing the largest personal and corporate income tax increases along with increases in Capital Gains and Social Security taxes.  If the Congress votes to raise all of these taxes, they will go into effect on January 1, 2022.  And, there is no doubt that these massive tax increases with slow down the economy.  If that happens real estate values and stock market prices will fall particularly if the Federal Reserve also raises interest rates.  

Real Estate Values seem to run in 10 year cycles.  So, we are now in an up cycle with values at very high prices.  It will not last forever.  At some point supply and demand will equalize.  When that occurs, we are likely to see prices come down.    

At Paragon Home Resources we have assisted families with selling and buying homes for more than 30 years.  We have worked through good and bad markets.  We know how to achieve the best price when selling a home and the best price when buying a home.