Here’s the real reason why home prices are soaring these days.

Who exactly is to blame for these surging home prices? This question is on many people’s minds in the market lately.

I’m sure a lot of people think that the sellers and builders are to blame, but that’s not actually the case. The market is set by the buyers. Homebuyers are paying high prices for homes, which are established using the comparable sales approach. Since many sold homes are similar to yours, you could probably expect a big price for your house.

When buyers pay a high price for a home, that becomes fair market value for the next home. Sellers are simply asking for what their neighbors got, and as long as buyers continue to pay increased prices, then the average price will keep rising.

“Since many sold homes are similar to yours, you could probably expect a big price for your house.”

Case in point: We just listed a property for $499,000, but their neighbor had listed their condo about four months prior for $469,000. Those neighbors ended up selling their condo for $540,000, so we couldn’t stick with such a low starting price. We had to be a little more competitive. 

Hopefully, the market will shift, and more houses will become available to give buyers more choices and, possibly, make them a little more reluctant to pay significantly more than the list price. If that does happen, interest rates will go up as well, so it will all even out.

If you have any questions about the market or real estate in general, don’t hesitate to give us a call or send an email. Grateful is our mindset, and passion is our fuel.