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HOME PRICES.

Why are they increasing...

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Why Are Home Prices Increasing?

Ryan Skrzypkowski

Ryan Skrzypkowski is the lead associate of the RSTS Group— a high-performance, innovative and in-demand real estate team with Coldwell Banker Global...

Ryan Skrzypkowski is the lead associate of the RSTS Group— a high-performance, innovative and in-demand real estate team with Coldwell Banker Global...

May 7 2 minutes read

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

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