The average price of a home in Southern California may be near a record high, but the number of buyers is far below where it normally is, the Orange County Register reports.
As detailed by opinion columnist Jonathan Lansner, the average price of a home in Southern California this April was $820,000, “just $1,125 below the record $821,125 set in February.”
While the concept of supply and demand would indicate that there must be enough buyers to prop up that high price, the opposite is true, Lansner writes.
“Sales are 25% below the 21-year sales average for April,” he said. “And this was the 36th consecutive month that the homebuying pace was below the historical norm for all months.”
Compare that to the dire real-estate market of the Great Recession of the late 2000s, in which “local sales … were below average for only 17 straight months,” he said.
So are we headed for another housing market crash? Experts say it’s possible, but unlikely.
Mortgage rates are relatively high right now, though they could ease in future months, making home ownership more affordable.
But Lawrence Yun, chief economist at the National Association of Realtors, told Business Insider the prediction goes back to supply and demand.
Unlike the 2000s, during which there was a larger supply of homes than demand for them, there is currently “just simply not enough supply,” he said.
As of 2003, “the country is short between 2.3 million and 6.5 million housing units,” according to Realtor.com.
“So the economics of supply and demand, if there’s a shortage, prices simply cannot crash,” Yun said.
