Experts in the real estate industry use a number of terms when they talk about what's happening with home prices. And some of those words sound a bit similar but mean very different things. Hey, it's Andy with The Mandel Team at RE/MAX. And to help you clarify what's happening with home prices and where experts say they're going, let's look at a few terms that you may hear. Appreciation is when home prices increase, depreciation is when home prices decrease but deceleration is when prices continue to appreciate but at a slower pace, you've probably seen that home prices have skyrocketed in the past two years but homes were actually appreciating long before that.
Home prices over the long term have only gone up and inflation usually increases home prices even further. They say, don't wait to buy real estate, buy real estate and wait. There was a line from The Sopranos, "Buy real estate, God isn't making any more of it". Home prices have climbed for 122 consecutive months and have gained value consistently over the past 10 years. But since 2020, the increase has been much more dramatic as home price growth accelerated. So why did home prices climb so much? It's because there were so many more buyers than there were homes for sale. And because we had a record low interest rates. That imbalance put upward pressure on home prices because demand was high and supply was low.
While this is helpful context, if you're a buyer or seller in today's market you probably wanna know what's gonna happen with home prices moving forward, experts are forecasting ongoing appreciation, just at a slower pace. In other words, prices will keep climbing, just not as fast as they have been. The graph below shows home price forecasts from seven industry leaders. None are calling for prices to fall. And although housing supply is starting to pick up, higher prices and interest rates have removed some of the demand from the market. It's not enough to make home prices decline 'cause there's still a big gap between the number of homes available for sale and the volume of buyers looking to make a purchase. We're getting back to the historical, normal levels of price appreciation, which is roughly around 4% per year. If you're thinking about making a move this year, don't let the headlines scare you from achieving your goals. Give us a call, shoot us a text or DM us to discuss what's happening in your hyper local market.Posted by Andy Mandel on