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How will this cycle balance supply and demand?

By
Real Estate Agent with Exit Team Realty

 

Supply and demand have always dictaded price on an open market.  It is no different with the current housing market.  We have a huge inventory with more to come this year.  So why are houses not being bought by current buyers if home affordability rose to its highest level in at least 20 years in the fourth quarter of 2010?  One of the reason there are so many houses on the market it's because people can't get approved to buy them right now.  With current prices, if people had the income and credit to get them, they would be scooped up at a rapid pace.  As inflation starts to take over, we will se interest rates begin to climb as a tool that the fed uses to keep inflation down.  This is going to make it harder for buyers to qualify for a loan on home they want and the supply will increase to even bigger levels. It will be interesting to see how the economics of this cycle reveal themselfs. 

Comments (1)

Connie Goodrich
Keller Williams Realty - McKinney, TX
CRS ABR (McKinney Realtor)Texas

Supply & Demand - I have a wonderful chart that I show my clients when I am on a listing appointment - A study of the months supply of inventory compared to that same quarter over the past since the year 2000.  It shows exactly what type of market we are in .. high inventory there is lots of competition and the seller must price to sale, low inventory the seller is more in the driver's seat and list price can be a little more high as demand for homes is higher.  It really helps me get them on board on correct price level and no games played.  Good luck! 

Feb 19, 2011 07:47 AM