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Home Price Increases May End When This Happens

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Affordability

Home Price Increases May End When This Happens


October 5, 2020
Foreclosure notice
Photo: Vitalii Vodolazskyi

What will be the demise of the housing industry’s unprecedented boom? As more obstacles and hurdles are thrown at the industry, it somehow keeps coming back stronger. But that’s not to say these key issues—housing inventory, building materials, worker shortages, general economic uncertainty—will not catch up to the industry eventually. According to Fortune, once forbearances are lifted, a wave of foreclosures might be what calms the industry’s unmanageable demand. Housing inventory has remained a problem for years, but a wave of foreclosures would bring inventory back and help to level prices out.

 

“These increases are unsustainable, but prices will keep rising in double digits for another six months to a year,” says Ed Pinto, director of the American Enterprise Institute (AEI) Housing Center and the former chief credit officer for Fannie Mae. “America is running out of inventory. Buyers can’t buy houses that aren’t for sale, so they’re bidding up the prices of the relatively few on the market. That means price increases will keep racing until more inventory comes on. And new supply will come on slowly.”


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