"When Will Prices Decrease Next?"

Jason Pacheco • April 1, 2024

A question that frequently comes my way is, "When do you anticipate prices will come down?" It's a valid concern, especially considering historical data. Since 1960, prices have only experienced a significant decline once, largely attributable to poor lending practices. Over the past 60 years, we've seen prices decrease noticeably only on that one occasion. Given this historical trajectory, with roughly 16 years having passed since the last substantial price reduction, it's pertinent to question the likelihood of it occurring again in such a short timeframe.


In my view, the odds of prices dropping significantly within the next 2-3 years seem slim (barring any unforeseen economic events). Factors such as the persistently low inventory and the relentless demand for housing paint a picture of a market resistant to price decreases.


To put it simply, housing has become a necessity akin to toilet paper. Just as a shortage of toilet paper on store shelves leads to competitive purchasing behavior and even higher prices, the real estate market faces a similar scenario. With a surplus of buyers and a scarcity of available properties, competition naturally drives prices up.


Furthermore, any decrease in interest rates is likely to exacerbate the situation, drawing even more prospective buyers into the market without a corresponding increase in housing supply. This influx of buyers only intensifies the competition for limited inventory, potentially leading to further price escalation.


In essence, the dynamics of supply and demand, coupled with the influence of interest rates, create a scenario where significant price reductions in the housing market appear unlikely in the foreseeable future.



Jason Pacheco,

Jason.Pachecohomes@gmail.com

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