In a normal real estate market, home prices appreciate 3.7% annually.
These wild swings in values were caused by abnormal ratios between the available supply of inventory and buyer demand in the market.
In a normal market, there would be a 6-month supply of housing inventory.
By that time, inventory levels had fallen to 6.2 months and the market began its recovery.
Over the last five years, inventory levels have remained well below the 6-month supply needed for prices to continue to level off.
As a result, home prices have increased over that time at percentages well above the appreciation levels seen in a more normal market.
This means prices should continue to appreciate at above-normal levels which most experts believe will happen for the next year.
The latest Existing Home Sales Report from the National Association of Realtors revealed that inventory has increased over the last two months after thirty-seven consecutive months of declining inventory.
Buyer Demand is Softening Ivy Zelman, who is widely respected as an industry expert, reported in her latest ‘Z’ Report: “While we continue to expect a resumption of growth in resale transactions on the back of easing inventory in 2019 and 2020, our real-time view into the market through our Real Estate Broker Survey does suggest that buyers have grown more discerning of late and a level of “pause” has taken hold in many large housing markets.
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