Housing market signaled potential future downturn in 2018
Long plagued by housing shortages, inventory spikes signal change may be coming The housing market over the last five years have been marked by a shortage of homes for sale and ever-rising prices. This dynamic has been especially prevalent in coastal markets like New York, San Francisco, and Los Angeles, which tend to be expensive anyway.
Expectations were that this was going to continue, but in 2018, the market started to cool. This past summer?usually a busy season for homebuying?was suppose to be ?the most competitive housing market in recorded history,? according to one realtor, with prospective buyers engaging in bidding wars over the few houses that were for sale.
That didn?t pan out, suggesting that home prices have finally risen beyond what people can actually pay; wages have risen at a much slower clip than home prices. The housing market follows the old economic principle of price being a function of supply and demand, and demand is strong with the economy doing well and older millennials finally entering stages of life that lead to buying a home. Coming out of the summer on the West Coast, homes that were expected to spark bidding wars instead lingered on the market, leading to huge spikes in inventory for sale. San Francisco, San Jose, and Denver?some of the hottest markets over the last five years?were among the cities that saw the biggest inventory jumps.
This fall, those same markets saw median listings prices drop considerably. It?s important to distin...
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