If you're in the market for a house, you might have noticed that prices in your neighborhood are still high. Simply put, that's a consequence of supply and demand.
"Home sales are lower. But home prices are still rising, which is very unique because of the limited inventory condition," said Lawrence Yun, the chief economist for the National Association of Realtors.
Experts say the current housing market is unique, and unfortunately there's no quick fix.
"The supply of homes that's available for sale right now is the lowest in more than 25 years, despite the fact that our population is considerably bigger. So there's really no comparison to that set of circumstances," said Greg McBride, the Chief financial analyst for Bankrate.com.
Eleven interest rate hikes over the last year and a half means mortgage rates went from a record low of around 2.5% in January 2021 to over 7% today.
What would turn the market around? More home construction could ease the strain, but that can't happen overnight.
If the Fed lowers interest rates, that would lower mortgage rates and potentially entice some homeowners to sell. But a meaningful drop in interest rates could mean bad things for other parts of the economy.
"The only way mortgage rates are gonna drop that significantly is if the economy completely rolls over. Well, in that environment, you know, unemployment is going up. That's not exactly the time when people would be looking to buy houses or be able to buy houses," explained McBride.
Congress could also impact the housing market. The National Association of Realtors has been lobbying lawmakers for a temporary tax break for "mom and pop" real estate investors.
"If they were to sell it to a first-time buyer, then the capital gains tax will be reduced from that sale. So at least provide some financial incentive so that mom and mop real estate investors would unload those properties onto the market," said Yun.
But real estate is local. So what's happening to home prices in one city might look different from what's happening one state over. But overall, experts don't foresee another spike in home prices over the next year or two, which should be good news for potential buyers.
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