Why Are Home Price Rising? Are Builders Building Enough New Homes?

Why are home prices rising? The main reason home prices are rising is because of lack of inventory of homes for sale. This is exacerbated by the lack of new home building. In the US there are usually 20 Million new homes built a year. The last decade there were less than 6 Million homes built. The last time this few homes were built were during the great depression!

In order for the current real estate bubble to not crash, there needs to be significant number of homes that come on the market and sit for a long period of time before they sell. This would cause downward pressure on home prices and would allow the rise of real estate values to decrease or flatten out.

There is no short-term evidence the real estate market will crash or that there is a bubble in the US housing market. Until something else happens, home prices are likely to keep rising.

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