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When will the balloon pop?

The Real estate market has been in hyper-drive now for the better part of a year. It has been driven by a scarcity of homes for sale on the market. Even before the pandemic we were faced with a shortage of homes to sell. The market responded by bidding up the prices of existing homes. 

 At one point we expected new home construction to help fill in the void of homes, but recent increases in lumber prices have slowed new home construction. As a result, it has not been uncommon for listings to generate many offers and ultimately sell for higher than listed prices. 

 Current home owners are watching their home values rise by double digits in a year. This has truly been a strange market. Will it ever get back to some semblance of normalcy? I believe it will. These high rates of home value increases just are not sustainable. At some point homes will be priced out of reach of buyers. As to when this will happen? Let me dust off my crystal ball...