If you’re trying to choose whether or not to sell your house, fresh headlines about home prices may be top of mind. And if those stories have you wondering what that means for your home’s price, here’s what you really need to know.
What’s Really Happening with Home Values?
It’s likely you’ve seen news stories mentioning a drop in home values or home price depreciation, but it’s vital to remember those headlines are intended to make a big impression in just a few words. But what headlines aren’t constantly great at is painting the full picture.
While home prices are down somewhat month-over-month in some markets, it’s also true that home values are up nationally on a year-over-year basis. The graph below uses the latest data from S&P Case-Shiller to help tell the story of what’s actually happening in the housing market today:
It’s true home price increase has moderated in recent months (shown in green) as buyer demand has pulled back in response to advanced mortgage rates. Today’s headlines are trying to bring attention to this.
But the wider, longer-term picture is what you should pay attention to. Although the growth in home prices month over month is slowing, the percentage of appreciation year over year is still significantly higher than the shift in home prices we observed in years when the market was more stable. The bars from January 2019 to mid-2020 demonstrate that an annual increase in property prices of roughly 3-4% was more typical (see bars for January 2019 through mid-2020). However, even the most recent data for this year indicate that costs have increased by about 10% compared to last year.
What Does This Mean for Your Home’s Equity?
While you might not be able to benefit from the 20% appreciation, we experienced in early 2022, in most markets, the value of your property has increased by 10% compared to the previous year. This rise is still significant when compared to the more typical appreciation rate of 3-4%.
Don’t let the headlines get in the way of your plans to sell. Over the past two years alone, you’ve likely gained a substantial amount of equity in your home as home prices climbed. Even though home price moderation will vary by market moving forward, you can still use the boost your equity got to help power your move.
As Mark Fleming, Chief Economist at First American, says:
“Potential home sellers gained significant amounts of equity over the pandemic, so even as affordability-constrained buyer demand spurs price declines in some markets, potential sellers are unlikely to lose all that they have gained.”
If you have questions about home prices or how much equity you have in your current home, reach out to Nathan Walldorf at 423-544-7700.