Today, home prices are driven by the simple concept of supply and demand, and home price appreciation continues to accelerate. The strong year-over-year home price appreciation is simple to explain. Pricing can be determined by how many homes are available compared to how many people want to buy that home. The demand for housing is up while the supply of homes for sale are still at historic lows.
Three different maps will explain how this theory continues to affect the residential real estate market today.
Map #1 – State by State Housing Appreciation
Map # 1 explains the state-by-state price appreciation reported by the Federal Housing Finance Agency (FHFA) for the first quarter of 2021 compared to the first quarter of 2020.
As the map shows, certain states (in red) have appreciated well above the national average of 12.6%.
Map #2 – State by State Housing Inventory
Map #2 explains the change in state-by-state inventory levels year-over-year reported by realtor.com.
The two maps compared show a correlation between change in listing inventory and price appreciation in many states. Idaho, Utah, and Arizona are the best examples. Though the correlation is not as easy to see in every state.
The reason prices continue to accelerate is that housing inventory is still at an all-time low, while demand remains high. However, this may be changing.
Is there housing inventory relief around the corner?
A report by realtor.com shows the monthly change in inventory for each state.
Map #3 – State by State Housing Inventory Changes
Map #3 explains state-by-state changes in inventory levels month-over-month reported by realtor.com.
As the map indicates, 39 of the 50 states saw increases in inventory over the last month. This may be evidence that homeowners who have been cautious to let buyers in their home during the COVID-19 pandemic are now putting their homes on the market.
We’ll know for certain as we move through the rest of the year.
What can we expect with home sales in 2021?
Some are concerned by the rapid price appreciation we’ve experienced over the last year. The maps above show that the increases were warranted based on great housing demand and a limited supply. Going forward, if the number of homes for sale better aligns with demand, price appreciation will moderate to more historical levels.
Our experienced real estate team is here to help you find the perfect home for your lifestyle. One of our main priorities is to always look out for our client’s interests first and take the necessary time to find the right home that meets their budget.
If you are looking to buy, rent, or sell a home, contact Wenzel Select Properties. Our future real estate office is located in the heart of downtown Downers Grove at 4941 Main Street. We are minutes away from Interstates 88, 355, 55, 290, and 294. Our building renovations will be completed by the end of 2021.
Wenzel Select Properties real estate brokers are available to meet with you 7 days a week – Monday through Sunday. Call us today at (630) 430-4790.