We’ve been living in some strange times. Not Mongol invasion, bubonic plague, Russian Revolution strange times, but definitely different from pre-2020. Who would have thought that when COVID hit we’d be seeing a record surge in homes sales? Nationwide housing prices are up 25% since March 2020, and we’ve seen a similar trend here in the Valley. Home inventory hit record lows not seen since record-keeping began.
Many experts have analyzed the situation from all types of angles. Factors such as looming housing shortages finally coming to a head, a new demographic entering the housing market, lumber prices, life disruption leading to people making housing/location changes, rising cost of rent, low interest rates, and more all appear to be factors.
So, what’s going to happen from here? This has been the number one question I’ve been asked since COVID hit in 2020. And I just have to say, I don’t know for sure. I don’t have a crystal ball. There are the two schools of thought I consistently hear:
a) The market has gone up like crazy, and we have a crash in home prices coming.
b) Inflation is going to continue to drive prices up and this is the cheapest we will ever see real estate prices ever again.
I have gone back and forth, and see merits to both lines of thinking, but I lean towards perspective “b.” While we might have a 2008 crash, the price of real estate over time has always gone up, and the value of the dollar goes down. When it comes to home prices, apart from some cataclysmic doomsday scenario, the 2008-like scenarios tend to be a temporary blip on the long-term trajectory. Sure, people who are hit hard financially can be devastated in such situations, especially if they are over-leveraged; but with that said, the effects are temporary for those who can weather the storm. Of course, this doesn’t take into account local declines (i.e. oil crash in the 80’s). Even with this said, real estate historically is a better investment than the dollar, and those who invest in real estate tend to fare much better than those who don’t.
Dave Ramsey isn’t my guru, but I thought it was interesting to hear his thoughts:
Of course, I could be wrong. Something unprecedented in the US housing market could happen. There’s a margin of error. With that said, housing prices generally go up over time, and the value of the dollar goes down. Not to mention the rampant spending/fiat money creation we’ve been seeing. We probably haven’t reached the end of the rise in inflation.
But, keep in mind, I don’t have a crystal ball, I’m not an economist, and am only sharing my humble observations of the local, national, and historical housing markets.
Whatever your take on things, if you are looking for a home to purchase, I’d love to go over your home buying goals and get a customized search set up! If you are considering selling, I’d be happy to provide a free market analysis.
Let me know how I can help! Happy Monday,
Advantage Alaska Real Estate
“Your home sold in 90 days, or I’ll sell it for free!”
P.S. ~ My goal is to always do an excellent job for my clients. If I’m doing a great job for you, please consider passing my name on to others who are looking to buy or sell real estate in the local area