FinancingHousing shortageMarket DirectionMillennials

Rising House Prices are Unsustainable

Prices have been rising for six years and are continuing to rise. When does it end? Analysts think it may be soon. There’s one key difference between the current economy and the last housing boom. Previously, it was accessible loans that drove high buyer demand and thus enabled sellers to safely raise prices to match increasing demand. Now, prices are skyrocketing much faster than income accessibility. Wages are up only 14% compared to six years ago, in contrast to a price jump of 48%. Another factor affecting affordability is that interest rates are going up.

Rising prices have gone on as long as they have because demand is actually quite high at the moment. People who haven’t been able to buy since the recession — particularly Millennials — are trying to take advantage of the relatively more stable economy. The problem is that they can’t afford it, and more are starting to realize that. Demand is beginning to fall off, and with that, prices are going to need to start coming down in order to sellers to manage to sell at all.


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