The housing market has been unbelievably unbalanced over the past two years. Probably has not been this difficult to buy a new home since three million GIs came home from World War II, got married, and started a baby boom. If you don't build very many new houses for a dozen years, and a generation coming of age finally decides they want a home, well, at that point no supply meets excess demand. Anyone trying to buy a house in the past two years is painfully familiar with the story: very few choices, inflated prices, multiple competing offers, sale prices well over list price. To call this housing market chaotic might be charitable. Rising interest rates may have started a cooling trend. Buyers needing mortgages suddenly can't afford to pay as much as they could have six months ago. Will sanity (from the viewpoint of those of us who prefer calmer markets) return? Tough to say. There is still a significant lack of supply to meet any kind of demand.
Michael Batnick, a fairly bright finance guy, takes a stab at understanding what is going with this blog post. Love his conclusion:
Eventually the market will find an equilibrium, but right now the housing market is drunk and needs time to sober up.