Are Home Prices Going To Come Down?

Today’s headlines and news stories about home prices are confusing and make it tough to know what’s really happening. Some say home prices are heading for a correction, but what do the facts say? Well, it helps to start by looking at what a correction means.

In the context of today’s housing market, it doesn’t mean home prices are going to fall dramatically. It only means prices, which have been increasing rapidly over the last couple years, are normalizing a bit. Prices vary a lot by local market, but a big drop off isn’t what’s happening at a national level.

The Real Estate Market Is Normalizing

From 2020 to 2022, home prices skyrocketed. That rapid increase was due to high demand, low interest rates, and a shortage of homes for sale. But, that kind of aggressive growth couldn’t continue forever.

Today, price growth has started to slow down. This is a sign the market is beginning to normalize. The most recent data from Case-Shiller shows that after being basically flat for a couple of months last year, prices are going up at a national level – just not as quickly as before.

The big takeaway? So far this year, there’s been a much healthier pace of price growth compared to the pandemic. Of course, that’s what’s happening now, but you may be wondering what’s next for prices.

“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.”

It’s all about supply and demand. Increasing inventory plus limited buyer demand, will continue to ease some of the upward pressure on prices.

What This Means for You

If you are thinking about buying a home, slowing price growth is welcome news. Skyrocketing home prices during the pandemic left many would be homebuyers feeling priced out.

While it’s still a good thing to know the value of the home you buy will likely continue to go up once you own it, slowing price gains are making things feel more manageable.