The current state of the residential real estate market is marked by three factors: inflation, wages, and the price of homes. Currently inflation is rising at 2.9% (U.S. Labor Department); wage growth is up 3.2% (Federal Reserve Bank); and home prices are up 6.9% (S&P CoreLogic Case – Shiller). So while inflation and wages are increasing at approximately the same right, home prices are rising over two times as fast. This means, of course, that prices are continually pushing homes out of reach or more and more potential homebuyers.
Ideally, supply and demand will come more into balance. While homes will still be out of reach for many, hopefully wage growth and home prices will run closer to parallel. Analysts will also continue to be concerned about inflation which will effect the amount of income available for home purchases.