What Will It Take for Prices To Come Down?

If you’re wondering whether home prices will crash, you’re not alone. Some potential buyers might even hope for such a scenario to make purchasing a home more affordable. However, real estate professionals and experts agree that a significant drop in prices isn’t on the horizon – and here’s why.

The demand for homes continues to outpace the available supply, which keeps prices elevated. Let’s break down the reasons why Chicago homes and housing markets nationwide aren’t likely to see a significant decline in prices anytime soon.

Prices Depend on Supply and Demand

The housing market operates like any other market: when demand exceeds supply, prices rise. Currently, the United States faces a housing shortfall of several million homes. This mismatch between the number of buyers (demand) and available homes (supply) is the primary reason home prices remain high. As David Childers, President of Keeping Current Matters (KCM), explains:

“The main driving force on pricing is the limited amount of inventory in most markets across the country. That issue is not going to be solved overnight or in the next twelve months.”

How Did We Get Here?

Over the past 15 years, homebuilders have not constructed enough homes to meet buyer demand. Following the 2008 housing crisis, the rate of homebuilding slowed considerably. While new construction has increased in recent years, builders are still catching up to meet current demand, let alone make up for years of underbuilding (see graph below):

This underproduction of homes means the housing shortage persists. Until the supply catches up with demand, home prices in Chicago and beyond are likely to remain steady or continue climbing.

What About Next Year?

The majority of real estate agents and market analysts predict that home prices will rise again next year, though at a slower and more sustainable rate (see graph below):

It’s important to note that home price trends vary by market. For example, if Chicago homes see an increase in inventory, prices may grow more slowly or even decline slightly. However, in markets where inventory remains tight, prices are expected to keep climbing. That’s why working with a trusted real estate agent or a team of knowledgeable real estate professionals is essential to understanding your local market.

The Role of MPG

Our team of experienced real estate professionals is dedicated to helping you navigate the complexities of the housing market. Whether you’re buying or selling Chicago homes, we’re here to provide insights into the market’s dynamics and create a personalized strategy that works for you.

Bottom Line

If you’re wondering what it will take for home prices to come down, the answer lies in the balance between supply and demand. With inventory still limited in most areas, including Chicago, prices are likely to remain steady or increase.

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