Why it seems like home prices have risen too high too quickly.
What’s happening with home prices? They’ve been increasing nationally at historically high rates. There’s a lot to wrap your head around, so today I want to put our rising home prices into perspective.
Ever since the Great Depression, home prices have increased an average of 4% or 5% every year. In fact, if you take home prices from that time and raise them by 4% every year, you end up about where we are today.
This February, we had our Keller Williams National Convention, and Gary Keller went over some interesting statistics. If you take home prices from the 1990s and increase them by 4% every year, you get an average home price of about $343,000. This is very similar to our actual average home price, which is $378,000. You may have heard that our market is out of control with price increases, but as you can see, price growth is close to average.
If you look at the chart at 1:33, you can see that home prices took a big dip during the recession years. Over the last 10 years or so, the market has been correcting for this dip. That’s why it feels like prices are increasing so fast out of nowhere. Prices aren’t insanely high; they’re just where they would have been if the market never crashed.
I don’t have a crystal ball, so I can’t tell you what will happen in our market with 100% certainty. That being said, I know demand is still high, and supply is still low. Some markets are slowing down a little bit, but that isn’t the case in Chattanooga. In fact, prices may increase another 6% by the end of the year.
Is now the best time to buy or sell for you? It depends, so give me a call or send me an email if you have any questions. I look forward to hearing from you!