Why do we think property prices always go up in the long term?
Member since 2022 · 119 posts · 52 votes
Why do we think property prices always go up in the long term?
Most Popular Reply
Ryan KellyBusiness Member
Real Estate Broker · Austin, TX · Member since 2018 · 1k+ posts · 1k+ votes@Amby Bhagtani one word - Inflation. Hamburgers used to be $0.15 in the 1950’s and are now $10-$12. Why? The cost of materials and labor to make the burger steadily rose each and every year with inflation. Housing is no different. The average new home coasts builders 10x what it cost them 40-50 years ago to build. This will keep going through the course of time. Markets will inflate at different rates, but overall housing will steadily get more expensive because the dollar will continue to lose value, so you’ll need more dollars to buy the same things in the future.
Ryan Kelly Group - Keller Williams5110 Reviews
46 Replies
- CO · Member since 2022 · 588 posts · 426 votes3y
Historical patterns are the best way to predict future patterns. I also don't know what statistics you are looking at, everything I see says the U.S. pop is only going to grow (Only looking at where I invest). And logically, there is a huge housing shortage right now, so even if population stays the same it will take decades to catch up.
- Lender · Charlotte, NC · Member since 2020 · 224 posts · 221 votes3y
Hey Amby,
This is a great question and really depends on location of real estate, but I will do my best to explain. Although the world population may decline or just grow more slowly, that does not mean that the United States economy will slow, nor does it mean home prices will drop.
Like most things in the world, values of things are based off supply and demand. Right now, there is a shortage of home supply, meaning builders cannot build fast enough to meet the demand of people who want to buy a home. Likewise, more and more people are keeping their homes as rental properties, thus leaving none for first time buyers to become homeowners, especially if they have historically low rates.
Also, given that the government pumped trillions of dollars into the economy while shutting down factories and business, that also explains why prices should stay elevated indefinitely.
The problem is that for real estate to decrease in value, the human population would have to be cut in half (exaggeration to make a point). Or half the population would have to be jobless, or people would have to be fleeing the United States at a rapid pace. None of which are the case.
As long as people need places to call "home", then real estate will forever be growing in value. Again, not every location will see high growth, but real estate will never again be at 2008 levels or even Pre-Covid levels.
Great Discussion!
- Member since 2022 · 119 posts · 52 votes3y
Quote from @Jon Puente:
Hey Amby,
This is a great question and really depends on location of real estate, but I will do my best to explain. Although the world population may decline or just grow more slowly, that does not mean that the United States economy will slow, nor does it mean home prices will drop.
Like most things in the world, values of things are based off supply and demand. Right now, there is a shortage of home supply, meaning builders cannot build fast enough to meet the demand of people who want to buy a home. Likewise, more and more people are keeping their homes as rental properties, thus leaving none for first time buyers to become homeowners, especially if they have historically low rates.
Also, given that the government pumped trillions of dollars into the economy while shutting down factories and business, that also explains why prices should stay elevated indefinitely.
The problem is that for real estate to decrease in value, the human population would have to be cut in half (exaggeration to make a point). Or half the population would have to be jobless, or people would have to be fleeing the United States at a rapid pace. None of which are the case.
As long as people need places to call "home", then real estate will forever be growing in value. Again, not every location will see high growth, but real estate will never again be at 2008 levels or even Pre-Covid levels.
Great Discussion!
Thanks so much Jon, can you elaborate on this "Also, given that the government pumped trillions of dollars into the economy while shutting down factories and business, that also explains why prices should stay elevated indefinitely."
- Lender · Charlotte, NC · Member since 2020 · 224 posts · 221 votes3y
Quote from @Amby Bhagtani:
Quote from @Jon Puente:
Hey Amby,
This is a great question and really depends on location of real estate, but I will do my best to explain. Although the world population may decline or just grow more slowly, that does not mean that the United States economy will slow, nor does it mean home prices will drop.
Like most things in the world, values of things are based off supply and demand. Right now, there is a shortage of home supply, meaning builders cannot build fast enough to meet the demand of people who want to buy a home. Likewise, more and more people are keeping their homes as rental properties, thus leaving none for first time buyers to become homeowners, especially if they have historically low rates.
Also, given that the government pumped trillions of dollars into the economy while shutting down factories and business, that also explains why prices should stay elevated indefinitely.
The problem is that for real estate to decrease in value, the human population would have to be cut in half (exaggeration to make a point). Or half the population would have to be jobless, or people would have to be fleeing the United States at a rapid pace. None of which are the case.
As long as people need places to call "home", then real estate will forever be growing in value. Again, not every location will see high growth, but real estate will never again be at 2008 levels or even Pre-Covid levels.
Great Discussion!
Thanks so much Jon, can you elaborate on this "Also, given that the government pumped trillions of dollars into the economy while shutting down factories and business, that also explains why prices should stay elevated indefinitely."
What I mean by this is that when COVID happened, the government was sending $1400 checks and unemployment checks to people every month. When you print money out of thin air and add it to the supply of circulating money, there is more money (more supply). When there is more supply of something, the value of that something goes down, which means it takes more dollars to buy the same goods. Hence why real estate values grew massively.
- 3yV.G JasonPro MemberInvestor · Member since 2022 · 3k+ posts · 3k+ votes
Quote from @Amby Bhagtani:
I have a very basic question (almost sounds silly), I keep hearing property prices always go higher in the long term (not referring to short term fluctuations). Apart from that's how its been historically can someone explain to me how this works, when the worlds population maybe at the verge of declining.
How much land is there? Is population growing?
For the person that said historical patterns are the best way to predict future patterns is a load of hot garbage, no offense to the person just the point is used a ton here and it's just absolute garbage. History is just that-- it's history. It's by no means or ways an indication of the future. Cool to know, hardly applicable. Just think fundamentally, how much land is available and how much is the population growing?
If land is decreasing over time + population is growing, do you believe housing is a necessity? I would hope so. There's your reason it's going to appreciate in price. I think in the next 10-20 years, in a higher rate environment, it's going to have the best ROI. People won't realize it now but in 5-7 years pricing affordability for houses won't just come down to the absolute value of the house but also the taxes & insurance. Those prices will sky rocket, this will in turn impact rent. The solution is for this is turning commercial properties into apartments. This will soften the blow to a degree, but single family housing will remain an outlier and completely disassociate from the normalcy of growth it has from the 1960s to 2020. The post-covid era will be a hard physical asset premium. History would disagree with me, but history hasn't faced these sets of variables.
- 3yV.G JasonPro MemberInvestor · Member since 2022 · 3k+ posts · 3k+ votesPopulation would need to significantly shrink-- I agree. Or viable land that's accessible would have to double, and supplies & labor to create a house would have to reduce significantly.
Quote from @Jon Puente:
Hey Amby,
This is a great question and really depends on location of real estate, but I will do my best to explain. Although the world population may decline or just grow more slowly, that does not mean that the United States economy will slow, nor does it mean home prices will drop.
Like most things in the world, values of things are based off supply and demand. Right now, there is a shortage of home supply, meaning builders cannot build fast enough to meet the demand of people who want to buy a home. Likewise, more and more people are keeping their homes as rental properties, thus leaving none for first time buyers to become homeowners, especially if they have historically low rates.
Also, given that the government pumped trillions of dollars into the economy while shutting down factories and business, that also explains why prices should stay elevated indefinitely.
The problem is that for real estate to decrease in value, the human population would have to be cut in half (exaggeration to make a point). Or half the population would have to be jobless, or people would have to be fleeing the United States at a rapid pace. None of which are the case.
As long as people need places to call "home", then real estate will forever be growing in value. Again, not every location will see high growth, but real estate will never again be at 2008 levels or even Pre-Covid levels.
Great Discussion!
- Rental Property Investor · Boston, Massachusetts (MA) · Member since 2016 · 2k+ posts · 2k+ votes3y
short answer: inflation. Numbers grow lots and relative values grow some
2nd answer: "buy land, they aren't making any more of it"
- Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes3y
The government targets long-term inflation of 2% (and passes policy that drives real inflation higher).
- Rental Property Investor · Boston, MA · Member since 2019 · 2k+ posts · 1k+ votes3y
@Amby Bhagtani because we’re in America and there’s only so much land and so much property to develop.
- Member since 2019 · 7k+ posts · 4k+ votes3yreal estate price is actually a derivative of M2 money supply.
Quote from @Amby Bhagtani:
I have a very basic question (almost sounds silly), I keep hearing property prices always go higher in the long term (not referring to short term fluctuations). Apart from that's how its been historically can someone explain to me how this works, when the worlds population maybe at the verge of declining.
MOney supply could only be increased. That's the basic financial reason. - Member since 2019 · 7k+ posts · 4k+ votes3y
Quote from @Carlos Ptriawan:
real estate price is actually a derivative of M2 money supply.Quote from @Amby Bhagtani:
I have a very basic question (almost sounds silly), I keep hearing property prices always go higher in the long term (not referring to short term fluctuations). Apart from that's how its been historically can someone explain to me how this works, when the worlds population maybe at the verge of declining.
MOney supply could only be increased. That's the basic financial reason.Also, since 1971 there's disconnect between productivity and real estate which means re ownership is higher priority than having a good job .... LOL :)
- 3yRyan KellyBusiness MemberReal Estate Broker · Austin, TX · Member since 2018 · 1k+ posts · 1k+ votes
@Amby Bhagtani one word - Inflation. Hamburgers used to be $0.15 in the 1950’s and are now $10-$12. Why? The cost of materials and labor to make the burger steadily rose each and every year with inflation. Housing is no different. The average new home coasts builders 10x what it cost them 40-50 years ago to build. This will keep going through the course of time. Markets will inflate at different rates, but overall housing will steadily get more expensive because the dollar will continue to lose value, so you’ll need more dollars to buy the same things in the future.
Ryan Kelly Group - Keller Williams5110 Reviews - Member since 2019 · 7k+ posts · 4k+ votes3y
Quote from @Ryan Kelly:
@Amby Bhagtani one word - Inflation. Hamburgers used to be $0.15 in the 1950’s and are now $10-$12. Why? The cost of materials and labor to make the burger steadily rose each and every year with inflation. Housing is no different. The average new home coasts builders 10x what it cost them 40-50 years ago to build. This will keep going through the course of time. Markets will inflate at different rates, but overall housing will steadily get more expensive because the dollar will continue to lose value, so you’ll need more dollars to buy the same things in the future.
yep, m2 + inflation is driving up home price.
This is also reason why january and february of the following year is always always always having higher price than previous year's winter season.having said that, if you dont own a house, you are guaranteed poorer by next year, just because of inflation alone. this fact people dont get it.
- Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes3y
The world's population is no where near declining
District Invest Group546 Reviews - Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes3y
Quote from @Amby Bhagtani:
I have a very basic question (almost sounds silly), I keep hearing property prices always go higher in the long term (not referring to short term fluctuations). Apart from that's how its been historically can someone explain to me how this works, when the worlds population maybe at the verge of declining.
I actually think this is a really interesting question. It's a important fundamental that most don't actually know or comprehend, and why later analysis struggles, because the foundation comprehension is weak.
Three main factors. And this fact of the 3 main factors, creates a 4th factor actually, because given several force factors to ascending price, it's insulates from downward fluctuations.
The first, let's address the population item. Let's say population stays dead flat, which it has not and is not today, but we will get to that later but for now let's say it stays dead flat. So your assuming that would mean housing would stay flat, 0 demand right? But that's assuming housing is eternal, which it is not. Housing is actually a DEPRECIATING asset, just as your CPA. yes, it's true, housing is a depreciating asset just like a car, cell phone etc, just on a longer timeline. Yes, housing wears out and, in time, will go to 0, ie be demolished. So housing at 0 added new demand via population, has an existing demand via REPLACEMENT. So keep this in mind, there is a cycle of replenishment for existing population base.
Now unto population growth. yes, population growth has been slowing BUT that's only specific to exactly that, the rate of growth, it's a skewing of facts because of math. Here is the thing, if you have a room of 100 people, and add 10 people to it, that's a 10% growth, right. Ok, now if you have a room of 1,000 and add 10 people, that only 1% right. So, is population declining? It was 10 people added before, it's still 10 added now, the ADDED people is the same BUT since the total size is so much bigger, the ADDITIONAL people seem smaller, way WAY smaller, because of the math. Now, the rate of growth is slowing, yes, but it's still the same # of people added.
During covid outbreak and "mass deaths" the US population still GREW. The US alone has about 400 million people, what looks like a tiny % growth rate is, in actual real numbers, millions of people.
Lastly is tied to the above two which is M2, or Money supply. Every day, and I do mean EVERY day MORE currency is put into the economy than the day before. There is a few ways this is done, most focus on just policy action that directly injects capital into the system BUT since the U.S. works on fractional lending that means every day countless banks across the country are "creating" new $ into existence every day via the lending cycle. This is, in theory, a good things because if the # of dollars floating around stood still, but # of people increase, that would mean less $ for each person and less to go around means less goes around, so less is done, and it creates DEFLATION and recession. To stay even, inflation is required. This is why the Fed today says it wants to get down to inflation around 2% and not 0. Inflation is good, when in balance.
But, since we have a all but constant inflation, that also means a steady devaluation of each $ "in the flow". So this last factor is that the real estate could actually stay flat in it's value BUT price goes up, due to inflation and the devaluation (purchase power) of each $ in your hand.
There is this eco-system that is intertwined, with feedback loops, that leads to the steady march of real estate prices going up over time.
So back to your population item. Even with population declining slightly, it does little to disrupt due to the cycles of replenishment, and fact of money supply. To get real and sustained deflation, population would need to meaningfully decline for a sustained measure, and in like kind money supply also get burned off at a matching rate or disproportionately quicker so to increase the purchasing power of each $. And than we have all the other details such as all resources for unit replenishment would need to stay in ample supply, labor to stay in ample supply, all this inputs in ample supply without any scarcity because again scarcity drives up value.
Yeah, it seems a really simple question but the reality ot the answer is far more detailed and interwoven than most ever think or want to think to be honest.
- Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes3y
Quote from @Carlos Ptriawan:
Quote from @Ryan Kelly:
@Amby Bhagtani one word - Inflation. Hamburgers used to be $0.15 in the 1950’s and are now $10-$12. Why? The cost of materials and labor to make the burger steadily rose each and every year with inflation. Housing is no different. The average new home coasts builders 10x what it cost them 40-50 years ago to build. This will keep going through the course of time. Markets will inflate at different rates, but overall housing will steadily get more expensive because the dollar will continue to lose value, so you’ll need more dollars to buy the same things in the future.
yep, m2 + inflation is driving up home price.
This is also reason why january and february of the following year is always always always having higher price than previous year's winter season.having said that, if you dont own a house, you are guaranteed poorer by next year, just because of inflation alone. this fact people dont get it.
But what about '08' Carlos? (yes, I am being cheeky)
People will say if they just wait 60 odd years or so they may get the chance ot buy in at another massive crash. I mean, forget fact that in a crash there holding there $ so tight because there life also crashed but hey, forget all that sense and just think, they "could" buy in with as much as a 30% discount.
Yes, so prices went up 147% while they waited for that 30% discount...... lol.
- 3yJay ThomasPro MemberReal Estate Agent · Houston, TX · Member since 2021 · 1k+ posts · 715 votes
Real estate in the United States is a great investment opportunity, as historical patterns have shown. From the numbers I am seeing, it appears that the population of the US is only going to continue to grow, which will further drive up demand for housing and create more opportunities for investors. With the current housing shortage, it may take some time for supply to meet this increased demand – but those who invest early can expect to benefit from positive returns over the long-term. Real estate investing can be a smart way to build wealth for years to come.
- Rental Property Investor · Member since 2020 · 1k+ posts · 1k+ votes3y
As they say in finance in your disclosures past performance doesn’t guarantee future results. While this is true absent Elon coming up with a crystal ball it is the best thing we have. All the other smarter posts have been said so no need to repeat those.
- Contractor · Scottsdale, AZ · Member since 2010 · 2k+ posts · 3k+ votes3y
Quote from @James Hamling:
Quote from @Amby Bhagtani:
I have a very basic question (almost sounds silly), I keep hearing property prices always go higher in the long term (not referring to short term fluctuations). Apart from that's how its been historically can someone explain to me how this works, when the worlds population maybe at the verge of declining.
I actually think this is a really interesting question. It's a important fundamental that most don't actually know or comprehend, and why later analysis struggles, because the foundation comprehension is weak.
Three main factors. And this fact of the 3 main factors, creates a 4th factor actually, because given several force factors to ascending price, it's insulates from downward fluctuations.
The first, let's address the population item. Let's say population stays dead flat, which it has not and is not today, but we will get to that later but for now let's say it stays dead flat. So your assuming that would mean housing would stay flat, 0 demand right? But that's assuming housing is eternal, which it is not. Housing is actually a DEPRECIATING asset, just as your CPA. yes, it's true, housing is a depreciating asset just like a car, cell phone etc, just on a longer timeline. Yes, housing wears out and, in time, will go to 0, ie be demolished. So housing at 0 added new demand via population, has an existing demand via REPLACEMENT. So keep this in mind, there is a cycle of replenishment for existing population base.
Now unto population growth. yes, population growth has been slowing BUT that's only specific to exactly that, the rate of growth, it's a skewing of facts because of math. Here is the thing, if you have a room of 100 people, and add 10 people to it, that's a 10% growth, right. Ok, now if you have a room of 1,000 and add 10 people, that only 1% right. So, is population declining? It was 10 people added before, it's still 10 added now, the ADDED people is the same BUT since the total size is so much bigger, the ADDITIONAL people seem smaller, way WAY smaller, because of the math. Now, the rate of growth is slowing, yes, but it's still the same # of people added.
During covid outbreak and "mass deaths" the US population still GREW. The US alone has about 400 million people, what looks like a tiny % growth rate is, in actual real numbers, millions of people.
Lastly is tied to the above two which is M2, or Money supply. Every day, and I do mean EVERY day MORE currency is put into the economy than the day before. There is a few ways this is done, most focus on just policy action that directly injects capital into the system BUT since the U.S. works on fractional lending that means every day countless banks across the country are "creating" new $ into existence every day via the lending cycle. This is, in theory, a good things because if the # of dollars floating around stood still, but # of people increase, that would mean less $ for each person and less to go around means less goes around, so less is done, and it creates DEFLATION and recession. To stay even, inflation is required. This is why the Fed today says it wants to get down to inflation around 2% and not 0. Inflation is good, when in balance.
But, since we have a all but constant inflation, that also means a steady devaluation of each $ "in the flow". So this last factor is that the real estate could actually stay flat in it's value BUT price goes up, due to inflation and the devaluation (purchase power) of each $ in your hand.
There is this eco-system that is intertwined, with feedback loops, that leads to the steady march of real estate prices going up over time.
So back to your population item. Even with population declining slightly, it does little to disrupt due to the cycles of replenishment, and fact of money supply. To get real and sustained deflation, population would need to meaningfully decline for a sustained measure, and in like kind money supply also get burned off at a matching rate or disproportionately quicker so to increase the purchasing power of each $. And than we have all the other details such as all resources for unit replenishment would need to stay in ample supply, labor to stay in ample supply, all this inputs in ample supply without any scarcity because again scarcity drives up value.
Yeah, it seems a really simple question but the reality ot the answer is far more detailed and interwoven than most ever think or want to think to be honest.
Came to reply, but this reply cannot be topped. Thank you James for taking the time to write this out. Very good perspective and very easy to digest.
- Real Estate Agent · Chicago, IL · Member since 2018 · 1k+ posts · 1k+ votes3y
Quote from @Russell Brazil:
The world's population is no where near declining
An aging population presents a lot of problems for a society/the world.
"Population growth has declined mainly due to the abrupt decline in the global total fertility rate, from 5.3 in 1963 to 2.4 in 2019.[4] The decline in the total fertility rate has occurred in every region of the world and is a result of a process known as demographic transition. " - link
"At the global level, population decline is driven by low and falling fertility levels. In 2019, more than 40 per cent of the world population lived in countries that were at or below the replacement rate of 2.1 children per woman; in 2021, this share climbed to 60 per cent." - link
"Common worries are that population aging and decline result in labour and skills shortages, weaken economic productivity and innovation, slow economic growth and development, impose unsustainable fiscal pressure on governments and people, lead to cultural and ethnic shifts in societies, and weaken the political and military power of countries."
"Population growth is currently concentrated in the world’s poorest countries, which remain at a relatively early stage of the demographic transition, while some of the richest countries are beginning to see population decline. Such decline has happened before—mostly during wars and famines—but this time it is different."
- Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes3y
Quote from @Paul De Luca:
Quote from @Russell Brazil:
The world's population is no where near declining
An aging population presents a lot of problems for a society/the world.
"Population growth has declined mainly due to the abrupt decline in the global total fertility rate, from 5.3 in 1963 to 2.4 in 2019.[4] The decline in the total fertility rate has occurred in every region of the world and is a result of a process known as demographic transition. " - link
"At the global level, population decline is driven by low and falling fertility levels. In 2019, more than 40 per cent of the world population lived in countries that were at or below the replacement rate of 2.1 children per woman; in 2021, this share climbed to 60 per cent." - link
"Common worries are that population aging and decline result in labour and skills shortages, weaken economic productivity and innovation, slow economic growth and development, impose unsustainable fiscal pressure on governments and people, lead to cultural and ethnic shifts in societies, and weaken the political and military power of countries."
"Population growth is currently concentrated in the world’s poorest countries, which remain at a relatively early stage of the demographic transition, while some of the richest countries are beginning to see population decline. Such decline has happened before—mostly during wars and famines—but this time it is different."
Can you point to a year in which the population has declined? No you cant. Because it hasnt happened. The closest you can get to is the population increasing only 81 million in 2020 because the death rate spiked with covid. (Down from an 83 million general yearly trend)
Instead of looking at narratives that media like to create (in all subjects), its much more useful to look at actual data.
Or maybe its a misunderstanding in terminology in not understanding the difference between growth rate and population growth. In nearly all aspects of life, as a large number grows, the rate at which it grows becomes a smaller percentage. For instance its easier for a $10 million company to rise 1,000% to $100 million, than it would be for a $1 trillion company to rise to $100 trillion. But the small percentage growth of the $1 trillion company would be even a larger growth than the entire value of the $10m company.
So while 80 million becomes a small percentage of 7 billion...its still 80 more million than the previous year which is a damn lot of people. And a damm lot that need to be housed. (Though many wont be)
District Invest Group546 Reviews - Member since 2019 · 7k+ posts · 4k+ votes3y
Quote from @James Hamling:
Quote from @Carlos Ptriawan:
Quote from @Ryan Kelly:
@Amby Bhagtani one word - Inflation. Hamburgers used to be $0.15 in the 1950’s and are now $10-$12. Why? The cost of materials and labor to make the burger steadily rose each and every year with inflation. Housing is no different. The average new home coasts builders 10x what it cost them 40-50 years ago to build. This will keep going through the course of time. Markets will inflate at different rates, but overall housing will steadily get more expensive because the dollar will continue to lose value, so you’ll need more dollars to buy the same things in the future.
yep, m2 + inflation is driving up home price.
This is also reason why january and february of the following year is always always always having higher price than previous year's winter season.having said that, if you dont own a house, you are guaranteed poorer by next year, just because of inflation alone. this fact people dont get it.
But what about '08' Carlos? (yes, I am being cheeky)
People will say if they just wait 60 odd years or so they may get the chance ot buy in at another massive crash. I mean, forget fact that in a crash there holding there $ so tight because there life also crashed but hey, forget all that sense and just think, they "could" buy in with as much as a 30% discount.
Yes, so prices went up 147% while they waited for that 30% discount...... lol.
In 2008 , the accerlation of home price is twice faster than acceleration of M2 supply, that's the actual reason why it crashed
hahahahahaha
but yes that's the actual reason. - Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes3y
I think near term (5 years) supply limitations are the biggest driving factor. We have underbuilt since 2008 and it will take 5-8 years by most banks and analysts predictions to catch up. Some States will get there faster then others.
Inflation (and M2) is the underlying issues. Buffet said famously that his operating assumption is that the USD will go to zero value over the next 100 years.
We also like bigger houses now than we did in the 1950s.
And then there is migration. At the moment everyone wants to move to the south. I think this is a trend that could reverse at least partially in the future, depending how the climate changes, where fresh water is available. My home town Milwaukee might be on the winning side: we have not really had much of a winter thus far: very little snow and temps mostly in the 40s.
The reason why you see spring prices always higher than fall prices also has market psychological reasons - the market anticipates higher prices in spring and when buyers are confirming sellers notion, the price increase becomes reality.
- Austin, TX · Member since 2019 · 5k+ posts · 5k+ votes3y
To me (just off the cuff) it seems like couple of reasons:
[1] Inflation moves prices upwards as peoples incomes increase with inflation (more dollars to spend, but not necessarily more buying power).
[2] In some areas (Hot Areas at Hot Times) there are more Buyers than Sellers--further increasing prices in these areas.
Just my 2 cents,
- Member since 2019 · 7k+ posts · 4k+ votes3y
Yes, this in fact has no correlation with M2, M2 has no seasonality, but every year , Q1 and Q2 is always where there is uptrend in RE pricing and activity followed by flat or declining Q3/Q4.
The same seasonality happened all across US, from Hawaii to Milwaukee they're all reacted the same way. I guess people just buy house primarily to anticipate school season after summer so they buy in Q1 and Q2.
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