Supply Remains Historically Low
It’s no mystery why home prices are still climbing there just aren’t enough homes. Over a decade of underbuilding, especially after the 2008 housing crash, left the country short on inventory. Builders pulled back, and many never ramped back up. Now, even with demand holding steady, we’re still not building fast enough to meet it.
Add to that the mortgage lock in effect. Millions of homeowners locked in ultra low rates during the pandemic era refinancing boom. Now that rates have shot up, they’re reluctant to sell because buying again could mean doubling their monthly payment. So they stay put.
The result? Fewer homes on the market, more buyers than listings, and upward pressure on prices. It’s supply and demand in real time, and for now, low inventory continues to win out.
Demand Isn’t Dropping Off Enough
Millennials are now in their 30s and early 40s prime homebuying age. That generational shift alone fuels steady demand. Add in the reality that more people are working remotely or in hybrid setups, and buyers aren’t tied to expensive metros anymore. They’re hunting for space, value, and lifestyle, sometimes across state lines.
Meanwhile, cash is still flowing in from investors. Institutional buyers, undeterred by higher interest rates, see long term value and income in real estate. So do individuals with capital to deploy. Put simply, people aren’t waiting on the sidelines like you might expect in a shaky economy.
The result? Competition stays hot. Multiple offers are still common in sought after areas, even as the frenzy of the past few years cools. Demand hasn’t disappeared it’s just moving and reshaping. That’s enough to keep prices propped up in many corners of the market.
Inflation & Interest Rates: A Double Edged Sword
Higher interest rates were expected to slam the brakes on buyer demand. That hasn’t happened. Instead, many would be homeowners are pushing forward some hoping to lock in today’s rates before they climb again. Others see housing as protection against inflation, and they’re right: property often holds value better than cash.
On the flip side, tighter lending rules are filtering out some buyers, especially those without strong credit or sizeable down payments. But the slowdown isn’t deep enough to shift pricing trends. Serious buyers are still out there, and the competition’s still tight.
The result? Real estate remains a functional hedge, a perceived safe bet when traditional investments feel shaky. Even with borrowing costs rising, the mindset is this: own something real now.
(Related: Economic impacts on investments)
Home as a Long Term Investment
Homebuyers in 2024 aren’t chasing the next hot flip. They’re playing the long game. As economic uncertainty lingers from stock market swings to inflation jitters real estate stands out as a relatively stable asset. People are stepping back, zooming out, and rethinking what a home purchase means. It’s not just about living space anymore; it’s about building wealth over time.
Rental income is part of the equation. More investors see homes as multi use assets places that can also generate monthly cash flow. And thanks to platforms that make renting easier than ever, even casual landlords are getting in. That’s pulled in a new wave of long term minded buyers, many of whom used to stay out of real estate altogether.
Still, FOMO hasn’t disappeared. First time buyers, especially, don’t want to miss out on the window to buy before home prices climb further. Even with high interest rates, they’re jumping in often with the mindset that they can refinance later but won’t get another shot at a decent home in a decent neighborhood.
The result? A steady push on prices from people betting that real estate is still one of the better places to park their money long term.
(See more on economic impacts on investments)
Market May Be Slowing But Prices Aren’t Crashing
Yes, price growth is cooling. But if you’re waiting for a full on crash, don’t hold your breath. Most metro areas are still seeing modest increases or flat prices not dramatic drops. Granted, the market isn’t moving at the white hot pace of 2021, but the idea that prices would plummet once interest rates shot up hasn’t played out.
What we’re seeing instead is a patchy slowdown. The Sunbelt places like Phoenix, Austin, and parts of Florida are softening, thanks to earlier over inflation and investor fatigue. Meanwhile, the Midwest and Northeast are holding up better, largely because prices there didn’t surge as much to begin with.
Economists agree: this isn’t 2008. Lending standards have been tighter. Inventory remains low. And homeowners aren’t overleveraged in the same way they were back then. That means fewer distressed sales and less downward pressure.
The takeaway? The market’s hitting the brakes, not the wall. It’s resilient buoyed by demand, limited supply, and buyers who still see long term value in owning a home.
Bottom Line
The housing market isn’t running on vibes it’s running on fundamentals. And those fundamentals haven’t cracked, even with all the noise around inflation, rate hikes, and economic slowdowns. Short supply remains the anchor. New builds can’t keep up, and most current homeowners are staying put, unwilling to swap their low interest mortgages for higher ones. That means tight inventory, even in softer regional markets.
On the demand side, serious buyers haven’t backed off. First time homeowners, long term investors, and even some big institutional players are still on the hunt. This steady demand, layered over limited supply, helps keep prices up. Not in a frenzy but in a slow, grinding climb that rewards patience and solid planning.
For those in it for the long haul, real estate still holds up. It’s one of the few assets that brings both utility and appreciation a roof over your head and a lever for building wealth. That’s why seasoned buyers are staying in, and opportunists are still stepping up.
Economic jitters may shake confidence. But the floor? Still solid.
Michael Matherne has been instrumental in the development of Villa Estates Luxe, leveraging his extensive background in real estate and digital marketing to shape the platform's success. His strategic insights have been crucial in curating the latest news and market trends, ensuring that users receive timely and relevant information tailored to their needs. Michael has also been pivotal in enhancing the overall user experience, implementing innovative features that make navigating the site seamless. His commitment to providing high-quality content and fostering a community of informed buyers and investors has significantly contributed to Villa Estates Luxe’s reputation as a trusted resource in the luxury villa market.