Why do housing prices rise?
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It’s simple economics. SUPPLY and DEMAND.
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1st rule of economics: all resources are scarce!
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Everyone agrees that natural resources/homes/products/etc. are scarce because they can take a lot of effort, money, time, or other resources to get, or because there seems to be a finite amount available.
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In California, due to high population with a high demand for living space, and a limited supply of homes; housing prices tend to rise higher each year.
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Remodeling/renovating/updating a home, appreciation, and rental units can bring the value up every year as well.
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When the economy is going strong and unemployment goes down, housing prices tend to rise. In a strong economy, people feel more secure in their jobs and their ability to take on mortgage debt. They’re also more likely to get approved for that mortgage.
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Recessions and other disasters can lead to lower prices.
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Following recessions, home values can increase in some areas of the country because of strong demand and low supply, while other areas struggle to rebound. (Happening now)
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Potential homebuyers shouldn’t focus on national trends, as prices vary between states and even neighboring cities.
* Low mortgage rates have an indirect effect on home prices, as consumers are willing to take on more debt when credit is cheap.
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This leads up to making sure you have the best credit, good down payment, good job history, filed taxes, and pre-approval to buy the perfect home for you!