The Real Reason Home Prices are Increasing

    The Real Reason Home Prices are Increasing | MyKCM

    There are many unsubstantiated theories as to why home values are continuing to increase. From those who are worried that lending standards are again becoming too lenient (data shows this is untrue), to those who are concerned that prices are again approaching boom peaks because of “irrational exuberance” (this is also untrue as prices are not at peak levels when they are adjusted for inflation), there seems to be no shortage of opinion.

    However, the increase in prices is easily explained by the theory of supply & demand. Whenever there is a limited supply of an item that is in high demand, prices increase.

    It is that simple. In real estate, it takes a six-month supply of existing salable inventory to maintain pricing stability. In most housing markets, anything less than six months will cause home values to appreciate and anything more than seven months will cause prices to depreciate (see chart 1).

    The Real Reason Home Prices are Increasing | MyKCM

    According to the Existing Home Sales Report from the National Association of Realtors (NAR), the monthly inventory of homes has been below six months for the last four years (see chart 2).

    The Real Reason Home Prices are Increasing | MyKCM

    Bottom Line

    If buyer demand outpaces the current supply of existing homes for sale, prices will continue to appreciate. Nothing nefarious is taking place. It is simply the theory of supply & demand working as it should.

    Let’s get together and discuss your options! 541.371.5500 or

    By: KCM Crew

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    Mary Gilbert

    Mary Gilbert, Licensed Realtor in Oregon has distinguished herself as a leader in the Roseburg OR real estate market. Mary assists buyers looking for Roseburg OR real estate for sale and aggressively markets Roseburg OR homes for sale. Mary brings with her a keen eye for the details of buying or selling a Roseburg OR home and seemingly boundless determination and energy, which is why her clients benefit from her unique brand of real estate service. Rooted in Tradition, Focused on the Future –Mary Gilbert of Keller Williams Realty Umpqua Valley will help make the most of your Roseburg OR real estate experience. Give her a call today, 541-371-5500, and discover the difference she can make during your family's move.

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