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Will Home Prices Continue to Appreciate?

It’s no surprise that buyers are concerned about how quickly home prices are escalating. With that, comes the fear of a market crash down the road. To ease some of these concerns, we looked at several financial analysts’ comments on the current state of the residential real estate market.

 

Within the last thirty days, major financial services came to the same conclusion: the housing market is strong, and price appreciation will continue.

 

Morgan Stanley, Thoughts on the Market Podcast:

“Unlike 15 years ago, the euphoria in today’s home prices comes down to the simple logic of supply and demand. This robust demand and highly challenged supply, along with tight mortgage lending standards, may continue to bode well for home prices. Higher interest rates and post-pandemic moves could likely slow the pace of appreciation, but the upward trajectory remains very much on course.”

 

Merrill Lynch’s Capital Market Outlook:

“Demand is very strong because the biggest demographic cohort in history is moving through the household-formation and peak home-buying stages of its life cycle. Coronavirus-related preference changes have also sharply boosted home buying demand. At the same time, supply is unusually tight, with available homes for sale at record-low levels. Double-digit price gains are rationing the supply.”

 

Goldman Sachs’ Research Note on Housing:

“Strong demand for housing looks sustainable. Even before the pandemic, demographic tailwinds and historically-low mortgage rates had pushed demand to high levels”

 

Joe Seydl, Senior Markets Economist, J.P.Morgan:

“Housing prices have spiked during the last six-to-nine months, but we don’t expect them to fall soon, and we believe they are more likely to keep rising.”