Unsubstantiated theories abound as to why New Jersey home values continue to increase. From those worried lending standards are again becoming too lenient (data proves this untrue), to those concerned that prices are again approaching boom peaks because of “irrational exuberance” (also untrue as prices are not at peak levels when they are adjusted for inflation), there seems to be no shortage of opinion.

Team Nest Builder wants to help you understand this increase in New Jersey home prices; it’s just supply and demand. Whenever there is a limited supply of an item that is in high demand, prices increase.  It’s that simple. In real estate, it takes a six-month supply of existing salable inventory to maintain pricing stability. In most housing markets, anything less than six months causes home values to appreciate and anything more than seven months causes prices to depreciate (see chart below).

Why Home Prices Are Increasing | MyKCM

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According to the Existing Home Sales Report from the National Association of Realtors (NAR), the monthly inventory of homes for sale has stayed below six months for the last five years (see chart below).

Why Home Prices Are Increasing | MyKCM

Bottom Line

If buyer demand continues to outpace the current supply of existing homes for sale, prices will continue to appreciate. Nothing nefarious is taking place. It’s simply the theory of supply and demand working. What this means to you as a home buyer is that acting today could save you money tomorrow.  Give Team Nest Builder’s Lynn Garafola a call at 973-222-3777 to start your home-buying process now! Liked this article?  Check out our blog for loads of helpful information on real estate, home improvement and community events!

Source:  KeepingCurrentMatters.com