Apart from the location, what influences house prices? When can we say that there is a drift in house prices towards new normal rather than considering low/high prices as an anomaly?

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Supply and demand
Affordability of a replacement house

Lots of people have low interest mortgages right now from refi’s in 2020 or 2021. Therefore, if they wanted to move to a “better” property, their monthly payment may skyrocket even if they have significant equity because a new mortgage would be at a significantly higher rate. Therefore, they don’t want to (or can’t afford to) sell.

This leads to a shortage in houses on the market in many desirable markets, which means anyone interested in a house that is for sale may have to pay significantly above asking or use other terms that makes them attractive to the seller (all cash, fast close, agree to seller terms like a leaseback, etc). A lot of buyers competing for very few houses will lead to prices rising despite high interest rates.

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Just Zillow / Redfin

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Schools

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Jobs bring people, strips supply, within the jobs driving range generally schools set location for families with kids, for non kid houses walkable areas trendy restaurants, close to the action. So you usually you have the hot suburbs with A schools and a trendy area near downtown. So the idea is to be in the path of progress within 30 or so minutes from employers. In addition to that you can look at migration trends. Interest rates will obviously affect affordability and slow transaction volumes. Falling transaction volumes leads to lower prices. Rising unemployment tends to happen about the same time as house price declines. Historical affordability is a good indicator to watch because we have an average that tells you about where we are in a given cycle. Regardless of your regional market, nationally there is an average. My market might decline 30% where another area might increase 5%. Historically 24-36 months from peak prices is a good time to buy and we’re currently in month 11.

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Investors often drive the market up, up and away: out of reach of owner-occupants. Sadly.

Thanks

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Jobs

I was thinking more the opposite when jobs are plentiful housing is scarce and expensive.

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