Simply put, current real estate prices are not in equilibrium. When it comes to a hot stock, the stock price may increase by 50% over just a couple of months and with gasoline prices we have all experienced a 25% increase in a matter of weeks. However, home prices do not quickly adjust to the equilibrium point! There are many reasons for this including appraisers who are slow to move the value up or down and banks who lend on conservative values. But currently demand is greatly outstripping supply, causing prices to push upward as fast as they are able.
Many sellers are holding off with placing their property on the market in anticipation of higher prices a year from now while with buyers, it’s exactly the opposite. The expectation of higher prices is causing a mad dash to buy a property as soon as possible.
Some thought that after last year’s spike in home prices, this year would bring just moderate increases….