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While average prices for homes in Southern California could be near record highs, the number of buyers is far below normal locations, the Orange County Register reports.
As comment columnist Jonathan Runner detailed, in April this year, the average price of a Southern California home was $820,000, “just $1,125 more than the February record set for $1,125.”
The concept of supply and demand shows that there must be enough buyers to support that high price, but the opposite is true, Runner writes.
“Revenue is 25% below the 21-year sales average in April,” he said. “And this was the 36th straight time, when the pace of buying homes was below historic norm for every month.”
Compare it to the disastrous real estate market of the Great Recession of the late 2000s. In this market, “local sales… have been below average for just 17 months,” he said.
So have we headed towards another housing market clash? Experts say it’s possible, but it’s unlikely.
Mortgage rates are currently relatively high, but they could ease in the next few months, making homeownership more affordable.
But Lawrence Yun, chief economist at the National Association of Realtors, told Business Insider that forecasts will return to supply and demand.
Unlike the 2000s, the supply of homes was greater than their demand during that time, but now they “simply lacking sufficient supply,” he said.
According to Realtor.com, as of 2003, “the country is short of between 2.3 million and 6.5 million housing units.”
“So, supply and demand economy cannot simply crash if there is a shortage,” Yun said.
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