One of the biggest questions people are asking right now is: what’s happening with home prices? There are headlines about ongoing price appreciation, but at the same time, some sellers are reducing the price of their homes. That can feel confusing and makes it more difficult to get a clear picture.
Part of the challenge is that it can be hard to understand what experts are saying when the words they use sound similar. Let’s break down the differences among those terms to help clarify what’s actually happening today.
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Appreciation is when home prices increase.
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Depreciation is when home prices decrease.
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Deceleration is when home prices continue to appreciate, but at a slower or more moderate pace.
Experts agree that, nationally, what we’re seeing today is
deceleration. That means home prices are appreciating, just not at the record-breaking pace they have over the past year. In 2021,
data from
CoreLogic tells us home prices
appreciated by an average of 15% nationwide. And earlier this year, that appreciation was upward of 20%. This year,
experts forecast home prices will appreciate at a
decelerated pace of around 10 to 11%, on average.
The graph below uses the
latest data from
CoreLogic to help tell the story of how home prices are
decelerating, but not
depreciating so far this year.
As the green bars show, home prices appreciated between 19-20% year-over-year from January to March. But over the last few months, the pace of that appreciation has decelerated to 18%. This means price growth is still climbing compared to last year but at a slower rate.
As the
Monthly Mortgage Monitor from
Black Knight explains:
“Annual home price growth dropped by nearly two percentage points . . . – the greatest single-month slowdown on record since at least the early 1970s. . . While June’s slowdown was record-breaking, home price growth would need to decelerate at this pace for six more months to drive annual appreciation back to 5%, a rate more in line with long-run averages.”
Basically, this means, while moderating, home prices are still far above the norm, and we’d have to see a lot more deceleration to even fall in line with more typical rates of home price growth. That’s still not home price depreciation.
The big takeaway is home prices haven’t fallen or
depreciated nationwide, they’re just
decelerating or
moderating. While some unique and overheated markets may see declines, nationally, home prices are forecast to appreciate. And when we look at the country as a whole, none of the experts
project home prices will net depreciate or fall. They’re all projecting ongoing
appreciation.
Conclusion
If you have questions about what’s happening with home prices in our local area, let’s connect.
The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. Center Real Estate, DBA does not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. Center Real Estate, DBA will not be liable for any loss or damage caused by your reliance on the information or opinions contained here.
