On The Horizon: The Perfect Storm

My wife recently sold a house above asking price in just 7 hours. With housing prices soaring and the existing inventory of newly built homes dwindling, this story feels all too familiar.

The National Association of Realtors reported that 99% of US cities experienced major housing price increases in Q1; 89% saw double digit gains.  My wife recently sold a house above asking price in just 7 hours. Sound familiar?  Yes, we’re back to 2006-7 with soaring housing costs. The national average sales price is now $397,800. Existing inventory of newly built and existing homes for sale has dwindled to less than 3 months of supply.  The only way to mitigate this problem is by building new homes at a faster pace.  Fortunately, NAHB is estimating that homebuilders are on track to build 1.7 million new homes in the next year, up 50% from last year.  Increasing supply will also release pressure on pricing. On the other hand, when you have the price of lumber skyrocketing over 280% and other building materials increasing substantially, then all bets are off.  Spiraling inflation will exacerbate housing prices.   Supply problems, inflation, and huge consumer demand are all coming together in a trifecta of pricing pain.  Watch this video to get another perspective:  click here.

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