Lisa Mailhot | July 17, 2023
Buyers
If you've been keeping up with the news, you might feel uncertain about the current state of home prices and worry about what the future holds. The headlines tend to paint a needlessly negative picture. However, to gain a clearer understanding, we need to consider a year-over-year perspective, which reveals that home prices dropped due to an extraordinary peak year rather than a long-term trend.
To avoid an unfair comparison with that peak, it's crucial to analyze monthly data, which tells a much more positive story. While local markets still exhibit variations, the national data offers encouraging insights.
By examining the recent monthly reports from three sources, we can see that the most severe home price declines are already behind us and prices are appreciating on a national scale.
Analyzing the monthly view, the past year in the housing market can be divided into two phases. In the first half of 2022, home prices were rapidly increasing. However, starting in July, prices began to decline. By around August or September, the trend started to stabilize. Yet, the most recent data for early 2023 also shows that prices are once again on the rise.
The fact that all three reports indicate consecutive months of price increases is an encouraging sign for the housing market. This month-over-month data suggests a national shift is occurring, with home prices beginning to rise again.
Craig J. Lazzara, the Managing Director at S&P Dow Jones Indices, offers the following statement regarding trends in home prices:
“If I were trying to make a case that the decline in home prices that began in June 2022 had definitively ended in January 2023, April’s data would bolster my argument.”
Experts attribute the resilience of home prices, despite expectations of a crash, to the insufficient number of available homes relative to the demand from potential buyers. Even with current mortgage rates, there is a greater demand for homes than there are homes available for sale.
Mark Fleming, the Chief Economist at First American, provides an explanation of how the imbalance between demand and supply creates upward pressure on prices:
“History has shown that higher rates may take the steam out of rising prices, but it doesn’t cause them to collapse entirely. This is especially true in today’s housing market, where the demand for homes continues to outpace supply, keeping the pressure on house prices."
Doug Duncan, the Senior Vice President, and Chief Economist at Fannie Mae, asserts that the growth in home prices is surpassing initial projections due to the significant level of demand in the market:
“. . . housing prices continue to show stronger growth than what was previously expected . . . Housing’s performance is a testimony to the strength of demographic-related demand . . .”
If you postponed your moving plans due to concerns about falling home prices, the latest data indicates that the worst is already behind us and home prices are appreciating on a national level. Let's connect so that you can stay informed about the local home price trends in our area.
Homebuyer and seller commission negotiations are heating up after new rules took effect in August. Discover how these changes are impacting average commission rates, n… Read more
In the aftermath of devastating LA wildfires, State Farm has requested a 22% insurance rate hike in California. Discover how this could impact homeowners, why wildfire… Read more
With rental market growth set to hit $5.35 trillion globally by 2025, investors can boost returns by diversifying portfolios, leveraging tech, and adopting proactive m… Read more
Baby boomers are holding tight to their real estate and assets, delaying the long-anticipated "Great Wealth Transfer." Learn how this affects millennials, Gen Xers, an… Read more
New-home sales defied expectations in December, rising 3.6% despite mortgage rates hovering around 7%. With builders offering incentives and inventory rising, now migh… Read more
As cities struggle with rising rents, micro-units are emerging as a practical solution for affordability and quality living. These compact, well-designed apartments of… Read more
Extreme weather is driving up home insurance premiums, with costs soaring 33% in recent years. Discover how climate risks are reshaping real estate markets, from risin… Read more
Michael Jordan's iconic Highland Park mansion, Champions Point, is now available for co-ownership starting at $1M. This unique opportunity offers luxury amenities, com… Read more
L.A. wildfires in January 2025 have put over $40 billion in real estate at risk, highlighting housing shortages and displacement concerns. Discover how these events im… Read more
Let's find a time that suits you best to chat about your goals, show you how we work, and figure out how we can help you the most