If you’ve ever dreamed of buying your own place, or selling your current house to upgrade, you’re no stranger to the rollercoaster of emotions changing home prices can stir up. It’s a tale of financial goals, doubts, and a dash of anxiety that many have been through.
But if you put off moving because you’re worried home prices might drop, make no mistake they are not going down. In fact, it’s just the opposite. National data from several sources says they have been going up consistently this year.
Here’s what this graph shows. In the first half of 2022, home prices rose significantly (the green bars on the left side of the graphs above). Those increases were dramatic and unsustainable.
So, in the second half of the year, prices went through a correction and started dipping a bit (shown in red). But those slight declines were shallow and short lived. Still, the media really focused on those drops in their headlines. That created a lot of fear and uncertainty among consumers.
But here’s what hasn’t been covered fully. So far in 2023, prices are going up once more. But this time at a more normal pace (the green bars on the right side of the graphs above). All three reports show more normal or typical price appreciation this year which is good news for the housing market.
Looking Ahead
Home price appreciation typically starts to ease up this time of year. As that happens, there’s some risk the media will confuse slowing price growth with home prices falling. Don’t be fooled. Slower price growth is still growth.
Why Are Home Prices Increasing Now?
One reason why home prices are going back up is because there still aren’t enough homes for sale for all the people who want to buy them.
Even though higher mortgage rates cause buyer demand to moderate, they also cause the supply of available homes to go down. That’s because of the mortgage rate lock-in effect. When rates rise, some homeowners are reluctant to sell and lose their current low mortgage rate just to take on a higher one for their next home.
So, with higher mortgage rates impacting both buyers and sellers, the supply and demand equation of the housing market has been affected. But since there are more people who want to purchase homes than there are homes available to buy, prices continue to rise.
Here’s How This Impacts You
- Buyers If you’ve been waiting to buy a home because you were afraid its value might drop, knowing that home prices have gone back up should make you feel better. Buying a home gives you a chance to own something that usually becomes more valuable over time.
- Sellers If you’ve been holding off on selling your house because you were worried about how changing home prices would impact its value, it could be a smart move to work with me and to put your house on the market.
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