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There is a hungry monster.
It stalks the real estate land and grows ever larger. The monster is buyer demand. The monster gorges itself on the money of willing buyers and lenders. As it grows bigger, its appetite for money increases. And as each meal takes more money than the previous meal, the number of people willing to feed the monster declines.
But a strange phenomena happens.
The monster must have more money per home. So fewer people are willing to buy homes as they become more expensive, but the prices continue to increase. If there are fewer buyers, why is the price increasing?
What is lacking is supply.
And the supply is still dwindling. As prices increase, home buyers aren't selling existing homes, because they can't find or afford newer homes. Potential home buyers continue to bid up the price of any home on the market. Which pushes appraisals higher, which causes banks to lend more, which increases the price of the next home that comes on market. And we spiral upward.
At least until the monster eats too much.
Let's check the numbers.
First, how big is the monster?
The average price of a home sold in March 2022 for the Georgia market is $415,021. That's TWENTY PERCENT higher than 12 months ago and FORTY PERCENT higher than 24 months ago. Ask yourself, did your paycheck go up 40% in the last 24 months?
So yes, the monster is growing bigger and it's hungry.
What about supply to feed it?
Nope, not helping. The number of homes for sale is FIFTY PERCENT of the number of homes for sale two years ago. Every single month for the last 24 months, there have been fewer homes on the market than the month before. Supply is cut in half, so yep, that will drive up price.
So will the monster keep growing?
For a while yes. Two things can happen in the near future. First, the number of potential home buyers may decline. A FORTY PERCENT run up in price will push some would-be buyers out of the market place. Couple that with rising interest rates and a very naughty rate of inflation, and we might see buyer demand decline in the next few months. Second, new homes are under construction. We keep hearing the rumor that supply is arriving soon. We see the new subdivisions are on the way. How many? I'm not sure at this point, since new homes are still being soaked up like water by a ShamWow.
What's it mean for new buyers?
FOMO? Or is this the time to wait for the dip to buy? Share your thoughts.
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