Why these 2 factors drive housing prices above all else

People are astonished at how housing prices are so strong right now. These 2 Housing factors are playing a very important role in the housing market. More importantly in one’s ability to decide to purchase a home

Your income people. Do not buy houses unless they’re feeling good about their income. More specifically, their job stability, job safety, and job comfort. Whatever you want to call it if the income is there and people are feeling optimistic about their employment this is a big driver of housing. People won’t make decisions about something as permanent as buying a house or a mortgage if there’s any disruption to their income or the possibility of having to change jobs in most cases.

Multiply this scenario a couple of million times across the country and you have a pool of buyers desiring to purchase houses in droves. Add that into low-interest rates and you have a recipe for an exuberant real estate economy that inevitably drives housing prices up. More people can buy, for example, at a 2.75% 30-year fixed than they can if rates were said at 3.75% on that same 30-year fixed loan.

The underlying theme here points to income stability, new job creation, job growth, and low unemployment. These are single handily the 2 biggest drivers of housing prices above and beyond all else. They are absolute. If we look at unemployment right now, which is very low, and with the economy rebounding from the pandemic with more jobs being created this recipe for future appreciation and a future competitive housing market is more than likely going to occur. The threat to this whole situation is a bad economy. Events transpiring that would throw a curve ball or a monkey wrench if you will into this formula. If no such curve ball happens, you can expect housing prices to continue to appreciate throughout the rest of 2021. It’s more than likely to be throughout the 1st half of 2022 and into the fall of 2022. Even if interest rates rise to some degree that will remove a small pool of buyers from the market. Yet the broader market will still be pointing to appreciation regarding rates. They are just another driver of affordability. At the end of the day income stability, job growth, and low unemployment are the factors that will move housing prices and will keep a lead foot on the housing accelerator.


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