Are Home Prices Going To Come Down?
Today's headlines about home prices can be confusing, making it tough to know what is really happening. Some predict a correction, but what does that mean for the housing market? Danielle Hale, Chief Economist at Realtor.com, explains:
“In stock market terms, a correction is generally referred to as a 10 to 20% drop in prices. We don’t have the same established definitions in the housing market.”
In today's context, a correction does not mean dramatic price drops. It means prices, which have been rising rapidly, are starting to grow at a slower pace. While prices vary by local market, a significant national drop is not happening.
The Real Estate Market Is Normalizing
From 2020 to 2022, home prices skyrocketed due to high demand, low interest rates, and limited inventory. That rapid growth could not last forever.
Now, price growth is slowing, signaling market normalization. Recent Case-Shiller data shows prices are still rising nationally, just not as quickly as before. This year's price growth is healthier compared to the pandemic's spike.
What’s Next for Prices?
Marco Santarelli, Founder of Norada Real Estate Investments, says: “Expert forecasts lean towards a moderation in home price growth over the next five years. This translates to a slower and more sustainable pace of appreciation compared to the breakneck speed witnessed in recent years, rather than a freefall in prices.”
Supply and demand are key. Increased inventory and limited buyer demand, due to higher mortgage rates, will continue to ease upward pressure on prices.
What This Means for You
If you are thinking about buying a home, slower price growth is good news. The pandemic's skyrocketing prices left many potential buyers feeling priced out. Slowing gains make buying more manageable. Odeta Kushi, Deputy Chief Economist at First American, says:
“While housing affordability is low for potential first-time home buyers, slowing price appreciation and lower mortgage rates could help — so the dream of homeownership isn’t boarded up just yet.”
Bottom Line
Nationally, home prices are not going down, and experts predict moderate growth moving forward. Prices vary by local market, so it is important to consult with a trusted real estate team like Scott and the Smolen Team. If you have questions about prices in your area, reach out to them today!
