Why do home prices keep rising?

Over the last few years, you’ve likely noticed a trend where home prices continue to rise. While the real estate market, in general, has always been going up, there are usually fluctuations where it will drop for a time. This hasn’t seemed to happen, and home prices have seen historic levels of increase.

Whether you’re looking to sell your home at its newly inflated value or trying to buy a house, you likely want to know why the prices keep going up and if they’re likely to do so in the future.

Low mortgage rates

One reason is that there have been low mortgage rates recently, which has prompted people to seek to buy now. They’re worried that mortgage rates are going to increase in the future, so they want to lock in that purchase before this happens. When you’re considering the overall costs of a 30-year mortgage, that interest percentage is very important, and it’s hard to predict what it will look like years in the future.

A supply problem

In many areas, there is also an issue with supply, in the sense that there are simply not enough homes on the market. The demand is much higher than the number of houses that people can buy, so that creates bidding wars as people attempt to purchase the ones that are actually up for sale. This could theoretically change in the future, especially if there is a significant rise in the number of homes being built, but continually rising population numbers mean that the supply is generally being strained.

Working through your sale

For both buyers and sellers in this volatile market, it’s very important to understand all of the legal steps that need to be taken so that you protect your interests and your finances.