It's absolutely possible that it's artificially high right now since it has risen so much. With a big jump, you can never tell whether it's the right amount, too little, or too much.
But fundamentally, supply is short due to years of falling behind on building it after the ~2008 mortgage crisis. It's going to take a really long time to catch up on that backlog. There's a relatively low maximum percentage you can increase the supply each year.
And now that mortgage rates are higher again and there are recession fears, investors may not be as excited about putting their money into housing construction. So we will have less of a push in the next few years to close that supply gap.
So I think the prices may fall or stagnate, but I doubt the bottom will fall out of real estate.
IMHO, another factor is that the pattern of development has changed. For a long time in the US, the pattern was sprawl, which presents few barriers to building huge amounts of housing because the land is cheap and maybe even in some unincorporated area with no red tape. Now, many people prefer density (or at least not sprawl), which means the housing that's in demand is more redevelopment and infill than giant new subdivisions. That's more tedious, more expensive, and more regulated, so it will happen more slowly. So another reason why supply is limited.
But fundamentally, supply is short due to years of falling behind on building it after the ~2008 mortgage crisis. It's going to take a really long time to catch up on that backlog. There's a relatively low maximum percentage you can increase the supply each year.
And now that mortgage rates are higher again and there are recession fears, investors may not be as excited about putting their money into housing construction. So we will have less of a push in the next few years to close that supply gap.
So I think the prices may fall or stagnate, but I doubt the bottom will fall out of real estate.
IMHO, another factor is that the pattern of development has changed. For a long time in the US, the pattern was sprawl, which presents few barriers to building huge amounts of housing because the land is cheap and maybe even in some unincorporated area with no red tape. Now, many people prefer density (or at least not sprawl), which means the housing that's in demand is more redevelopment and infill than giant new subdivisions. That's more tedious, more expensive, and more regulated, so it will happen more slowly. So another reason why supply is limited.