Reality of Realty: Decoding Today's Housing Market - Why Are Home Prices So High

By: Valerie Davenport

[TRANSCRIPT]

Hey future homeowners, welcome back to my channel, Reality of Realty; I’m Valerie Davenport, your trusted real estate guide, and today we're diving into the question everyone's asking: "Why are home prices so darn high right now?!”

So If you like videos like this and other behind the scenes peeks into what it’s like to be a realtor, don’t forget to like, share and subscribe so you’ll be notified when new videos are published.

And,whether you’re moving across the nation or across the street, tap into my resources by emailing me today using the email in the description box below. Now let’s get into the video.

Hey everyone, welcome back to my channel! 

If you've been scrolling through listings or even just chatting with friends, you've probably noticed that buying a home feels… well, expensive. It's not just your imagination! Today, we're diving deep into the key reasons behind these higher price tags. Think of it as unlocking the secrets of the current housing market. Let's get started!

First up, the golden rule of economics: supply and demand. It's a tale as old as time, folks. For a while now, we simply haven't had enough homes on the market to meet the sheer number of people who want to buy. Imagine a hot new gadget – if everyone wants one and there aren't many available, what happens to the price? Exactly! The same principle applies to housing. Fewer homes for sale mean more competition and, ultimately, higher prices.

Next, let's talk about the pandemic effect. Remember those early days? Things got a little… unpredictable. But then, something interesting happened. People started re-evaluating where they lived, and with historically low interest rates at the time, buyer demand really surged. Even though interest rates have adjusted since then, that initial wave of increased demand still has a ripple effect on the market today.

Now, let's step behind the scenes and talk about the cost of building. Think about all the stuff that goes into constructing a new house – lumber, concrete, steel, even the paint! The prices of many of these materials have seen their ups and downs, and often, they've gone up. Plus, skilled labor costs money. When it becomes more expensive to build new homes, that cost can trickle down and influence the prices of existing homes as well.

Speaking of costs, let's address interest rates. Now, this might sound a bit counterintuitive, but hear me out. While higher interest rates can sometimes cool the market by making mortgages more expensive, they also impact overall affordability. When rates were super low, buyers could often stretch their budget and afford a higher-priced home for the same monthly payment. As rates rise, the total cost of owning a home increases, and sellers are often looking to capture the highest possible value in the current financial landscape.

Don't forget the power of investment and inflation. Real estate is often seen as a pretty stable investment. In times when the general cost of everything is going up – that's inflation – assets like homes can also see their values increase. It's all part of the broader economic picture.

And finally, the classic: location, location, location! This one never gets old. If you're looking in a super desirable area with great schools, lots of job opportunities, and all the cool amenities, you can bet that prices will be higher. It's simple supply and demand on a hyper-local level – lots of people want to live in those prime spots, and there are only so many houses available. Pro tip, search the secondary market to your preferred location, such as the surrounding areas and lesser known towns.

So, there you have it! It's not just one single reason why home prices are where they are; it's a combination of these different factors all playing their part.

Now, what does all this mean for you? Whether you're looking to buy or sell, understanding these market dynamics is crucial. For buyers, it means being prepared, working closely with a knowledgeable agent (like yours truly!), and maybe being a little flexible in your search. For sellers, it's about understanding the current value of your property in this environment.

As your realtor, I'm here to guide you every step of the way. Let's work together to make your homeownership dream a reality. And for daily real estate insights, follow me on Instagram @valerie.rdavenport! R is for realtor!!

So that’s it for today’s video. I’ll wrap it up here by saying thanks for tuning in to the very end! If you found this info helpful, don't forget to like, share and subscribe, and hit that notification bell for more real estate insights. And, if you have any real-estate related inquiries, visit my website at valeriedavenport@unitedrealestatechicago.com or use my email in the description box below. Until next time, happy house hunting!