Stories of buyers paying well above asking prices are common, and tight supplies leave few options. It’s a tough market unless you’re a seller and don’t need to buy anything else. In addition, recent significant gains are leading to the exclusion of some buyers from the market. Even with stimulus and low interest rates, affordability is an issue, especially for first-time buyers or those with low incomes. The job market is picking up and wages are rising, but not as fast as house prices.

In addition, fears of a bubble are worrying and the real estate crisis aspect of the Great Recession is certainly not forgotten. This time, however, the price growth is due more to a supply-demand imbalance than to speculative factors.

There are signs that conditions are starting to normalize. The United States now has about six months of home inventory, meaning the current inventory for sale would last about as long given the current sale rate if no additional new homes were added to the market. That’s up from just over three months last fall, which is about as low as it has ever been.

Healthy real estate markets are good for the economy, and rising prices increase the wealth of homeowners. At the same time, expensive housing obviously presents financial challenges for buyers. We seem to be heading towards a happy medium.