4 Reasons Real Estate Prices Are Likely To Rise Through 2025
There’s a good chance real estate prices will continue to rise from now through 2025.
Although there has been some talk about a long overdue recession, and some signs of corrections in various markets, there are also a variety of factors which could continue to fuel higher housing prices over the next six plus months.
1. Uncertainty
Individual and institutional investors should have become quite used to investing in an uncertain environment by now. It’s been one of the top themes of the economy over the past five years.
Uncertainty creates volatility. It causes some to act emotionally and opens up opportunities for others.
In this space it means that there will be discounted properties available to grab. While those fleeing the stock market and other asset classes will increasingly put their capital into the solidity of real estate.
2. The Election
Aside from viruses, natural disasters, and normal economic rotations, we also have the big US presidential election this year. That is fueling a lot of uncertainty and will continue to drive investment choices until next year.
Whomever wins, we could still see housing prices rise.
On one hand, a Trump presidential win could bring more strength to the economy. More confidence in the economy can mean more jobs, more spending, more earnings, more investment, and consumers who can afford to pay more for homes.
A Harris win may mean many more handouts, including big down payment subsidies, and more construction. More subsidized housing and other programs could bring another four years of inflation, which ends up lifting housing prices too.
3. Affordability
Affordability is the one most impactful factor when it comes to housing prices. We are in one of the most interesting moments in recent history in terms of affordability.
On one hand millions of US households simply cannot afford to move locally due to high interest rates, and high living costs. This creates a shortage of homes for sale in some areas. Which then drives up prices.
Many others find that they must move to find less expensive places to live. That is driving up house prices in areas which have normally been cheaper. This domino effect keeps on spreading.
4. Rental Demand Keeps Growing
If the economy performs poorly many more households will have to rent for an extended period of time. If it performs well, more households are created, and demand for rentals increases.
Then there is continued immigration. Which not only includes adding around 1.6M people to the population long term last year, but granting over 10M temporary visas. Birth rates among newcomers could also support higher population growth over the next couple decades.
