Tag Archives: #homepriceappreciation

What’s Next for Home Prices

As the housing market cools in response to the rise in mortgage rates, home price appreciation is slowing as well. If you’re following the headlines in the media, you’re probably seeing a wide range of opinions calling for everything from falling home prices to ongoing appreciation. 

But what’s true? What’s most likely to happen moving forward?

While opinions differ, the most likely outcome is we’ll fall somewhere in the middle of slight appreciation and slight depreciation. Here’s a look at the latest expert projections, so you have the best information available today.

What the Experts Are Saying About Home Prices Next Year

The graph below shows the most up-to-date forecasts from five experts in the housing industry. These are the experts that have most recently updated their projections based on current market trends:

What’s Ahead for Home Prices? | MyKCM

As the graph shows, the three blue bars represent experts calling for ongoing home price appreciation, just at a more moderate rate than recent years. The red bars on the graph are experts calling for home price depreciation.

While there isn’t a clear consensus, if you take the average (shown in green) of all five of these forecasts, the most likely outcome is, nationally, home price appreciation will be fairly flat next year.

What Does This Mean?

Basically, experts are divided on what’s ahead for 2023. Home prices will likely depreciate slightly in some markets and will continue to gain ground in others. It all depends on the conditions in your local market, like how overheated that market was in recent years, current inventory levels, buyer demand, and more.

Prices vary from market-to-market and parts of the country. We’re friendly with colleagues in our business from across the country and watch them market homes for $450,000.00, for example, that would fetch $650,00.00 or more here.

What’s not going to happen is a dramatic drop in prices that some buyers are waiting for. No reputable expert is predicting the “crash” that would allow that to occur.

The good news is home prices are expected to return to more normal levels of appreciation rather quickly. The latest forecast from Wells Fargo shows that, while they feel prices could drop slightly in 2023, they also think prices will recover and net positive in 2024. That forecast calls for 3.1% appreciation in 2024, which is a number much more in line with the long-term average of 4% annual appreciation.

And the Home Price Expectation Survey (HPES) from Pulsenomics, a poll of over one hundred industry experts, also calls for ongoing appreciation of roughly 2.6 to 4% from 2024-2026. This goes to show, even if prices decline slightly next year, it’s not expected to be a lasting trend.

As Jason Lewris, Co-Founder and Chief Data Officer for Parcl, says: “In the absence of trustworthy, up-to-date information, real estate decisions are increasingly driven by fear, uncertainty and doubt.”:

As “Prof Hank” explained in a recent video posted to our YouTube channel, the media is not your best source of information.

So, don’t let fear, uncertainty or misinformation change your plans. If you’re unsure about where prices are headed or how to make sense of what’s going on in today’s housing market, let’s connect.

Please consider subscribing to our YouTube channel where we post up-to–date information for buyers and sellers that is pertinent to where we live. Or let’s chat at 508-360-5664 or msennott@todayrealerstate.com.

As we’ve mentioned before, we sold and bought earlier this year, so we had many of the same questions and concerns as homeowners as you might have. We’re happy to share with you what we learned as homeowners, as well as our perspective as real estate professionals.

Let’s talk soon…

Mari and Hank

What Does Price Appreciation Mean?

When you hear the phrase home price appreciation, what does it mean to you? Through context clues alone, chances are you know it has something to do with rising home prices. And as a seller, you know rising home prices are good news for your potential sale.

But let’s look past the dollar signs and dive deeper into the concept. To truly understand home price appreciation, you need to know how it works and why it matters to you.

Investopedia defines appreciation like this: “appreciation, in general terms, is an increase in the value of an asset over time. The increase can occur for a number of reasons, including increased demand, a weakening of supply, or as a result of changes in inflation or interest rates.”

When you consider the definition and how it applies to real estate, a few words stick out: supply and demand.

In today’s real estate market on Cape Cod and elsewhere, we’re experiencing high buyer demand and not enough sellers listing their homes for sale. No matter the industry, anytime there’s more demand than supply, prices naturally rise.

According to Quicken Loans, the national average home price appreciation rate is between 3-5% in a typical year. Today, home prices have been appreciating well beyond the norm thanks to high demand. Here are the latest expert projections on the rate of home price appreciation for this year (see chart below):

A Look at Home Price Appreciation and What It Means for Sellers | MyKCM

Compared to the normal pace of 3-5% appreciation per year, the current forecast of nearly 11.5% nationally is significant.

Across the Cape, the median sales price for a single family home (YTD) is up 30.4% from $461,000.00 to $601,000.00.

For sellers, this means that with the current rise in prices, your house may be worth more than you realize. Price appreciation helps give your equity a boost. Equity is the difference between what you owe on the home and its market value based on factors like price appreciation.

It works like this (see chart below). You can use your built-up equity to power a move into your dream home, or you can put it toward life-changing goals like funding an education or opening a business.

A Look at Home Price Appreciation and What It Means for Sellers | MyKCM

But — and this is important — while price appreciation is strong now, those same experts say it’ll start to appreciate at a more normalized pace next year. If you decide to sell sooner rather than later, you’ll be in a better position to capitalize on the higher-than-average home price appreciation we’re seeing today.

This morning at our virtual office meeting, we talked about how some sellers entering the market now may be disappointed that offers are not coming in at the head scratching figures over list price that they were a few months ago. One story was told of sellers, who received an offer at asking and countered $50,000.00 higher!

So, is it time to make your move? We’d be happy to help you review your options. Helping our clients make the best decisions for their individual situations has been our full time job for 22 years. Let connect at 508-568-8191 or msennott@todayrealrestate.com.

Talk soon…

Mari and Hank