What’s Happening With Home Prices?

There have been a lot of recent headlines that may have you second guessing selling your decision if you have been thinking about selling your home.  What is really missing in those headlines? Year-over-year price appreciation is still above market average.

• Between January 2019-Mid 2020 home appreciation has been 3-4%
• Latest data shows appreciation at almost 10%

In most markets, your home’s value, on average is up almost 10% over the previous year–and a 10% gain is still a great compared to a more normal level of appreciation (3-4%).  Now that is equity you can use to your advantage. The graph below uses the latest data from S&P Case-Shiller to help tell the story of what’s actually happening in the housing market today:

As the graph shows, it’s true home price growth has moderated in recent months (shown in green) as buyer demand has pulled back in response to higher mortgage rates. This is what the headlines are drawing attention to today.

But what’s important to notice is the bigger, longer-term picture. While home price growth is moderating month-over-month, the percent of appreciation year-over-year is still well above the home price change we saw during more normal years in the market.

The bars for January 2019 through mid-2020 show home price appreciation around 3-4% a year was more typical (see bars for January 2019 through mid-2020). But even the latest data for this year shows prices have still climbed by roughly 10% over last year.

WHAT DOES THIS MEAN FOR YOUR HOME’S EQUITY?

While you may not be able to capitalize on the 20% appreciation we saw in early 2022, in most markets your home’s value, on average, is up 10% over last year – and a 10% gain is still dramatic compared to a more normal level of appreciation (3-4%).

The big takeaway? Don’t let the headlines get in the way of your plans to sell. Over the past two years alone, you’ve likely gained a substantial amount of equity in your home as home prices climbed. Even though home price moderation will vary by market moving forward, you can still use the boost your equity got to help power your move.

As Mark Fleming, Chief Economist at First American, says:

“Potential home sellers gained significant amounts of equity over the pandemic, so even as affordability-constrained buyer demand spurs price declines in some markets, potential sellers are unlikely to lose all that they have gained.”

BOTTOM LINE

If you have questions about home prices or how much equity you have in your current home, reach out to a local real estate professional like myself for expert advice.

Source: Keeping Matters Current