If you’ve perused home listings in your area recently, you’ve likely noticed that the prices seem much higher than they would have been if you’d looked a year or two ago. It all comes down to the basic economic principle of supply and demand.
Here are some reasons for the increases:
- Millennials have reached their home-buying years. As the millennial generation enters their 30s, they’ve begun the common progression of “settling down” and buying homes. This higher demand has driven prices up in many areas.
- The pandemic drove people to upgrade or move. As stay-at-home orders sequestered people to work and live in their homes throughout 2020, many people realized they needed a change, leading more people to look for new places.
- Many people didn’t want to move. While some people wanted a change of scenery, others became firmly committed to staying put. As of April 2021, there were 20.5% fewer homes for sale than in 2020. With a large population looking to buy and not enough homes to sell, prices were bound to skyrocket.
- Supplies are getting more expensive. The logical solution to the lack of homes available would normally be building more. But the cost of building a home has become astronomical due to a shortage of labor and an increase in prices for materials like lumber. This has made it financially difficult to build new places, both for construction companies and for families looking for their own design.