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.Here’s what Danielle Hale, Chief Economist at Realtor.com, says: “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 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. In other words, they’re now growing at a slower pace. Prices vary a lot by local market, but rest assured, a big drop off isn’t what’s happening at a national level.The Real Estate Market Is NormalizingFrom 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, which 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 (see graph below):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. Marco Santarelli, the 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.”It’s all about supply and demand. Increasing inventory plus limited buyer demand, due to relatively high mortgage rates, will continue to ease some of the upward pressure on prices. What This Means for You If you’re 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. 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 LineAt the national level, home prices are not going down. And most experts forecast they’ll continue growing moderately moving forward. But prices vary a lot by local market. That’s where a trusted real estate agent comes into play. If you have questions about what’s happening with prices in your area, reach out to an agent.

Unlocking the Benefits of Your Home's Equity

Some HighlightsEquity is the difference between what your house is worth and what you still owe on your mortgage.The typical homeowner gained $28,000 over the past year and has a grand total of $305,000 in equity. And there are a lot of great ways you can use that equity.To find out how much equity you have, connect with a real estate agent who can give you a Professional Equity Assessment Report (PEAR).

Instant Reaction: Mortgage Rates, July 25, 2024

Facts: The 30-year fixed mortgage rate from Freddie Mac was nearly unchanged at 6.78% this week vs 6.77% last week. At 6.78%, with 20% down, a monthly mortgage payment on the median priced existing home of $426,900 is $2,222; with 10% down, it is $2,500. Positive: Also out today: GDP was stronger than expected. However, the PCE price index, which the Fed is watching, increased 2.6% for Q2, down from 3.4% in Q1. Under more Fed scrutiny, Core PCE rose 2.9%, down from 3.7%. Monthly PCE is out tomorrow. Negative: There is a divide among consumers who are spending, and those still feeling the strain of inflation. When the FOMC meets next week, this will probably still not be enough to lower the Fed Funds Rate and they will likely hold until September.