Area Real Estate News & Market Trends

You’ll find our blog to be a wealth of information, covering everything from local market statistics and home values to community happenings. That’s because we care about the community and want to help you find your place in it. Please reach out if you have any questions at all. We’d love to talk with you!

Sept. 22, 2022

Top Reasons Homeowners Are Selling Their Houses Right Now

 

Some people believe there’s a group of homeowners who may be reluctant to sell their houses because they don’t want to lose the historically low mortgage rate they have on their current homes. You may even have the same hesitation if you’re thinking about selling your house.

Data shows 51% of homeowners have a mortgage rate under 4% as of April this year. And while it’s true mortgage rates are higher than that right now, there are other non-financial factors to consider when it comes to making a move. In other words, your mortgage rate is important, but you may have other things going on in your life that make a move essential, regardless of where rates are today. As Jessica Lautz, Vice President of Demographics and Behavioral Insights at the National Association of Realtors (NAR), explains:

Home sellers have historically moved when something in their lives changed – a new baby, a marriage, a divorce or a new job. . . .”

So, if you’re thinking about selling your house, it may help to explore the other reasons homeowners are choosing to make a move today. The 2022 Summer Sellers Survey by realtor.com asked recent home sellers why they decided to sell. The visual below breaks down how those homeowners responded:

 

 

As the visual shows, an appetite for different features or the fact that their current home could no longer meet their needs topped the list for recent sellers. Additionally, remote work and whether or not they need a home office or are tied to a specific physical office location also factored in, as did the desire to live close to their loved ones.

The realtor.com survey summarizes the findings like this:

The primary reason homeowners decided to sell in the last year was the realization that, after so much time spent at home, they wanted different features and amenities, such as walkability, outdoor space, pool, etc. . . . 

If you, like the homeowners they surveyed, find yourself wanting features, space, or amenities your current home just can’t provide, it may be time to consider listing your house for sale.

Even with today’s mortgage rates, your lifestyle needs may be enough to motivate you to make a change. The best way to find out what’s right for you is to partner with a trusted real estate professional who can provide expert guidance and advice throughout the process. They can help walk you through your options, so you can make a confident decision based on what matters most to you and your loved ones.

Bottom Line

While the financial reasons for moving are important, there’s often far more to consider. Non-financial reasons can also be a significant motivating factor. If you need help weighing the pros and cons of selling your house, let’s connect today.

Sept. 14, 2022

Canyon Crest Proposed Rule Change for Artificial Turf

 

Proposed Rule Change for Artificial Turf in
Canyon Crest
You may have noticed in our most recent Canyon Crest HOA mailing that there are proposed artificial turf regulations to supersede the regulations already in place. The new rules have very specific stipulations about how artificial turf can be used - including but not limited to artificial turf shall not be installed closer than 24" to the community sidewalk and must have a defined permanent barrier at least 4" in width. 

I asked our HOA managers, Otis & Associates why this rule change has been proposed. Here is the response I received from Kathy at Otis HOA:

"There has been a steep rise in the requests by homeowners to install artificial turf in Canyon Estates.  Driving through the community, the Architectural Review Committee (ARC) noted that some installations look better than others.  They thought that some installations just looked like a big green rug and going over property lines. By restricting the amount of artificial turf and keeping plants, trees, etc. it would maintain a more natural look – retaining the premier status of the Canyon Estates community."

It makes sense that there has been an increase in artificial turf requests considering the drought conditions and threatened water restrictions. What are your thoughts about this proposed rule change?

Email me at leslie@theswanteamoc.com with your thoughts, as I have plenty of my own. I plan to attend the October meeting to find out what the HOA board, architectural review committee, and homeowners have to say about this issue.

Posted in Canyon Crest
Sept. 14, 2022

Canyon Crest Ice Cream Social

Saturday, September 24th from noon - 4pm

 

Yes, free ice cream for you! As a thank you to the neighborhood for all of your support over the years, I want to share with you a little last taste of summer.
Listen for the Music of the Ice Cream Truck as we drive down each street in the community from noon - 3 PM starting at the Rustic Oak gate. We will be parked at the Clubhouse from 3 PM - 4 PM for anyone we missed!

If you have any questions, please feel free to email me or call me at 949-444-1601.

*This event was approved by HOA Board and is provided by Leslie Swan of The Swan Team and Alan Ouye of Guaranteed Rate.

Posted in Canyon Crest
Sept. 14, 2022

September 2022 Canyon Crest Market Update - Slowest Time of the Year

 

 

With the start and settling into the new school year, traditionally August, September, and October are the slowest real estate activity months in Mission Viejo. Obviously, the past 2 years have been unique with COVID and the incredibly low-interest rates. But as we find ourselves with our "new normal" interest rates in the 5% range and COVID scares on the decline, we have moved back into our traditional real estate cycle.

 

Things haven't changed since last month: Homes are taking a lot longer to sell. The number of price reductions has surged higher in the past couple of months. As a result, many buyers sit on the sidelines waiting for prices to plunge. They are waiting for a deal, a total bargain. And simply put, that is not going to happen. 

 

In April/May, we hit what I like to call "an unrealistic peak." Buyers were willing to throw more money than anyone could fathom because they had access to a low-interest mortgage rate. They had to make an insane offer to stand out as a clear winner from the 10's of competing offers. The property on Deerbrook selling for $2.36m and then the Peartree property selling for $2.3m were buyers needing to rise to the top of the offer heap...those sales prices are more than anyone in our community could have ever imagined for a tract home and those sales prices no longer exist. 

 

Listings in our community are expiring (ie. being taken off the market because they are not selling). Listings are lowering their price. Listings are sitting for 100+ days. This may sound doom and gloom, but this is our new reality exacerbated by the higher interest rates, inflation and seasonality of the market.

 

The issue is that nobody has experienced a normal market in several years. It is hard to recall when housing was just ordinary. The key to selling your property in a "normal" market is to price your home at fair market value.  Fair market value takes into consideration any upgrades you have (or haven't) made to the property and compares that to most recent sales. Buyers are looking for remodeled/upgraded homes. Those are selling faster than homes that need updates.  

 

Need help determining how your home compares? That is where I come in!

 

I don't merely market, list, and sell your home. I am a consultant who helps you understand your options, helps create a plan that accounts for your particular wants and needs and then executes the plan with a precision that exceeds your expectations. 

 

Contact me now and get the best team in the business working for you!

 

See for yourself what is going on in the Canyon Crest market:

 

What's currently for sale?

Click here to see properties that are currently active

What properties are in escrow (under contract or pending)? 

Currently, there are no properties in escrow 

 

What properties have sold in the past 30 days? 

Zero properties have sold in the past 30 days

 

What properties have sold in the past 6 months?
Click here to see the properties that sold in the past 180 days

 

Posted in Market Updates
Aug. 9, 2022

August 2022 Canyon Crest Market Update - The New Normal

 

Boy, has the market changed in the past few months. Back in April, a property wouldn't stay on the market for more than a few days, and now we are looking at an average of 67 days on markets. The looming recession has buyers on the edge of their seats fully aware that the housing market has slowed considerably. From the flood of online news articles describing the real estate slowdown to the countless YouTube and TikTok videos detailing in only a few minutes how housing is about to crash, many buyers are convinced that the Orange County housing market is on the brink of collapse. Homes are taking a lot longer to sell. The number of price reductions has surged higher in the past couple of months. As a result, many buyers sit on the sidelines waiting for prices to plunge. They are waiting for a deal, a total bargain. Simply put, that is not going to happen. The market is, and will likely remain a slight seller's market through the end of year.

 

What does that mean?

 

That means that prices are not going to drop. They are going to remain stable. But, it does also mean that we aren't going to see the bidding wars that were ever-present in the first quarter of this year. 

 

In April/May, we hit what I like to call "an unrealistic peak." Buyers were willing to throw more money than anyone could fathom because they had access to a low-interest mortgage rate. They had to make an insane offer to stand out as a clear winner from the 10's of competing offers. The property on Deerbrook selling for $2.36m and then the Peartree property selling for $2.3m were buyers needing to rise to the top of the offer heap...those sales prices are more than anyone in our community could have ever imagined for a tract home. 

 

Those April/May prices are gone. Homes are now closer to the February sales prices - which are still amazing prices! But price reductions are quite common in today’s market. There are fewer multiple offer situations (if any), and most homes are selling below their asking prices. This is a “normal” market.

 

The issue is that nobody has experienced a normal market in several years. It is hard to recall when housing was just ordinary. The key to selling your property in a "normal" market is to price your home at fair market value.  Fair market value takes into consideration any upgrades you have (or haven't) made to the property and compares that to most recent sales. Buyers are looking for remodeled/upgraded homes - those are selling faster than homes that need updates.  

 

Need help determining how your home compares? That is where I come in!

 

I don't merely market, list, and sell your home. I am a consultant who helps you understand your options, helps create a plan that accounts for your particular wants and needs and then executes the plan with a precision that exceeds your expectations. 

 

Contact me now and get the best team in the business working for you!

 

See for yourself what is going on in the Canyon Crest market:

 

What's currently for sale?

Click here to see properties that are currently active

What properties are in escrow (under contract or pending)? 

Currently, there are no properties in escrow

 

What properties have sold in the past 30 days? 

Click here to see properties that have sold recently

 

What properties have sold in the past 6 months?

Click here to see the properties that sold in the past 180 days

 

 

Have questions?

Want more information?

Click on the envelope icon above to reach out via email or the phone icon to call directly

 

Click Here to Find Out What Your Property is Worth

 

 

Aug. 9, 2022

August 2022 Market Update - No Bargains

 

 

MANY BUYERS ARE LOOKING FOR A DEAL OR WAITING FOR THE HOUSING MARKET TO CRASH BEFORE THEY PURCHASE, BUT THAT IS NOT GOING TO HAPPEN ANYTIME ON THE HORIZON. 

 

 

The looming recession has buyers on the edge of their seats fully aware that the housing market has slowed considerably. From the flood of online news articles describing the real estate slowdown to the countless YouTube and TikTok videos detailing in only a few minutes how housing is about to crash, many buyers are convinced that the Orange County housing market is on the brink of collapse. Homes are taking a lot longer to sell. The number of price reductions has surged higher in the past couple of months. As a result, many buyers sit on the sidelines waiting for prices to plunge. They are waiting for a deal, a total bargain. 

 

Just because so many people are jumping to the conclusion that home values must plummet does not make it so. Merely mention a recession and everyone’s collective minds recall the devastating blow to housing during the Great Recession. Instead, homeowners across the country purchased their homes with huge down payments, extremely strong credit scores, money in the bank, and qualified for their mortgages. Buyers over the past many years have not been purchasing homes utilizing subprime loans, pick-a-payment plans, teaser rate adjustable mortgages, or zero down programs. This is not 2005 to 2008 all over again. 

 

 

Instead, with an Expected Market Time (the time between hammering in the FOR-SALE sign to opening escrow) of 67 days, it is a Slight Seller’s Market (between 60 and 90 days). It is not a Balanced Market (between 90 and 120 days). It is not a Buyer’s Market (over 120 days). The market still lines up in favor of sellers. In fact, in the past two weeks, the Expected Market Time dropped from 72 to 67 days. Surprisingly, the Orange County housing market got a little hotter. It appears as if this year’s rise in market time has stopped and will remain a Slight Seller’s Market for the remainder of the year. This is due to the active inventory nearing its 2022 peak, rising by only 28 homes in the past couple of weeks, and demand jumping by 7% with rates falling to levels last seen in April. 

 

The issue is that everyone had grown accustomed to two years of an auction-like atmosphere where there were only a limited number of homes available and an ocean of buyers willing to purchase, prompted by historically low mortgage rates. Open houses were flooded with potential buyers. It was not uncommon for homes to procure 20 or 30 offers in just days after coming on the market. Sales prices soared above their purchase prices. The trajectory was up, up, up, and up. That market was extremely unique and home values rose nationally at a record pace. Flash forward to today and the housing market is distinctly different. 

 

Most homes are not selling instantly. Busy intersections are now adorned with weekend Open House signs. It is not uncommon to see the same home open for several weeks in a row. Price reductions are quite common in today’s market. There are fewer multiple offer situations, and most homes are selling below their asking prices. This is a “normal” market. The issue is that nobody has experienced a normal market in several years. It is hard to recall when housing was just ordinary. 

 

 

An astounding 39% of the active inventory has reduced their asking price at least once. Many believe that price reductions are indicative of a buyer’s market where prices are falling. That is just not the case. Given today’s 67-day Expected Market Time, the price adjustments reveal the considerable number of homeowners who simply overpriced and did not cautiously approach pricing. When the Expected Market Time drops below 40-days as it did between August 2020 and May of this year, sellers got away with stretching their asking prices. Many real estate professionals scratched their heads in disbelief as their sellers picked arbitrary prices much higher than what was suggested by the professional, yet they still were able to obtain multiple offers and sell above their inflated asking prices. That market is now in the past. Arbitrarily pricing a home and stretching the asking price above the last comparable sale will result in limited activity and the need to readjust pricing. 

 

Many sellers are pricing their homes in line with a sale from earlier this year when there was nothing available and buyers paid way over the asking price. This occurred even while mortgage rates climbed from 3.25% at the start of this year to over 5% in May (according to Mortgage News Daily). The problem was that there was nearly nothing available to purchase and plenty of buyers ready to pounce on anything new that hit the market. On January 1st there were only 954 homes available, a record low compared to the 3-year average reading prior to COVID (2017 to 2019) of 4,665. Eager buyers who had written offer after offer with no success were willing to do whatever it took to finally purchase, including paying way over the asking price, often $50,000, $75,000, or even $100,000 plus over the list price. The underlying, changing mortgage rate environment did not justify these extremely high sales prices, yet it occurred, nonetheless. This was a frothy stage of this year’s market. 

 

Sellers who price their homes according to these frothy comps are finding that they are not able to sell. While a home may have closed for a top dollar record price in one neighborhood, there are often adjacent neighborhoods with comparable properties that did not experience a frothy sale this year and have homes available to purchase for far less. Buyers shopping around will notice the disparity in pricing and will opt to purchase the cheaper homes. 

 

It is a Slight Seller’s Market. That means that sellers still get to call more of the shots, but homes are not selling instantly, and home values are no longer soaring higher. In order to find success, sellers must carefully consider the most recent pending and closed sales and take into consideration the location, condition, upgrades, and amenities. While it may have been a place they called “home” for years, buyers do not have that emotional tie and will instead rely on the Fair Market Value based on comparable properties. With today’s higher interest rate environment, they do not want to overpay. 

 

 

Buyers must understand that the market is still not lining up in their favor. Yes, Orange County housing has slowed. They no longer have to make an instantaneous decision. They no longer are competing with a busload of other offers to purchase. They no longer need to write offers tens of thousands of dollars above the asking price. Yet, the market is still hot enough that they are not going to get a “deal” or buy a home at a “bargain” price. Values are not dropping. Instead, it is finally a normal market. 

 

Want more information about the market or perhaps your home? Contact us at 949-444-1601 or info@theswanteamoc.com.

Aug. 8, 2022

3 Graphs to Show This Isn't a Housing Bubble

 

With all the headlines and buzz in the media, some consumers believe the market is in a housing bubble. As the housing market shifts, you may be wondering what’ll happen next. It’s only natural for concerns to creep in that it could be a repeat of what took place in 2008. The good news is, there’s concrete data to show why this is nothing like the last time.

 

There’s a Shortage of Homes on the Market Today, Not a Surplus

The supply of inventory needed to sustain a normal real estate market is approximately six months. Anything more than that is an overabundance and will causes prices to depreciate. Anything less than that is a shortage and will lead to continued price appreciation.

For historical context, there were too many homes for sale during the housing crisis (many of which were short sales and foreclosures), and that caused prices to tumble. Today, supply is growing, but there’s still a shortage of inventory available.

The graph below uses data from the National Association of Realtors (NAR) to show how this time compares to the crash. Today, unsold inventory sits at just a 3.0-months’ supply at the current sales pace.

 

 

One of the reasons inventory is still low is because of sustained underbuilding. When you couple that with ongoing buyer demand as millennials age into their peak homebuying years, it continues to put upward pressure on home prices. That limited supply compared to buyer demand is why experts forecast home prices won’t fall this time.

 

Mortgage Standards Were Much More Relaxed During the Crash

During the lead-up to the housing crisis, it was much easier to get a home loan than it is today. The graph below showcases data on the Mortgage Credit Availability Index (MCAI) from the Mortgage Bankers Association (MBA). The higher the number, the easier it is to get a mortgage.

 

 

Running up to 2006, banks were creating artificial demand by lowering lending standards and making it easy for just about anyone to qualify for a home loan or refinance their current home. Back then, lending institutions took on much greater risk in both the person and the mortgage products offered. That led to mass defaults, foreclosures, and falling prices.

Today, things are different, and purchasers face much higher standards from mortgage companies. Mark Fleming, Chief Economist at First Americansays:

 

Credit standards tightened in recent months due to increasing economic uncertainty and monetary policy tightening.” 

 

Stricter standards, like there are today, help prevent a risk of a rash of foreclosures like there was last time.

 

The Foreclosure Volume Is Nothing Like It Was During the Crash

The most obvious difference is the number of homeowners that were facing foreclosure after the housing bubble burst. Foreclosure activity has been on the way down since the crash because buyers today are more qualified and less likely to default on their loans. The graph below uses data from ATTOM Data Solutions to help tell the story:

 

 

In addition, homeowners today are equity rich, not tapped out. In the run-up to the housing bubble, some homeowners were using their homes as personal ATMs. Many immediately withdrew their equity once it built up. When home values began to fall, some homeowners found themselves in a negative equity situation where the amount they owed on their mortgage was greater than the value of their home. Some of those households decided to walk away from their homes, and that led to a wave of distressed property listings (foreclosures and short sales), which sold at considerable discounts that lowered the value of other homes in the area.

Today, prices have risen nicely over the last few years, and that’s given homeowners an equity boost. According to Black Knight:

 

In total, mortgage holders gained $2.8 trillion in tappable equity over the past 12 months – a 34% increase that equates to more than $207,000 in equity available per borrower. . . .”

 

With the average home equity now standing at $207,000, homeowners are in a completely different position this time.

 

Bottom Line

If you’re worried we’re making the same mistakes that led to the housing crash, the graphs above should help alleviate your concerns. Concrete data and expert insights clearly show why this is nothing like the last time.

 

For more information about the real estate market in your community, please contact us at 949-444-1601.

Aug. 3, 2022

Mortgage Rates - This is What We Know To Be True


Up until about 20 years ago, rates generally remained about 7.5% and home buyers purchased homes at record rates to get their slice of the American Dream. But now that rates are in the mid-5% range, sales are slowing dramatically.

This is what we know to be true:

1. Rates have nearly doubled since the beginning of this year

2. Buyers have started to "hold off" on buying

3. Inventory is at historically low levels

4. Cash buyers once again reign supreme (for a time there, it was worth it for a seller to wait for a buyer with financing because they were willing to pay more than a cash buyer)

5. Since fewer people are buying, more people will need to rent causing greater competition in rental properties and causing rents to increase 

6. People will be throwing away money in rent when they could be investing it in their primary residence and writing off their interest payments

7. Rates will continue to go up making today a better time to purchase than tomorrow (Plus, if rates did ever go down in the future, you have the opportunity to refinance at any time.)

 

What is a Buyer to do??

BE REALISTIC. Yes, 6 months ago you could afford the monthly payment of $1 million and now your realistic budget is $800,000. (Good news: that's potentially $40,000 less you have to come up with in down payment!) Unlike 6 months ago, there isn't the same amount of competition - meaning you won't be in a bidding war and could actually purchase a home for its listing price. 

If you want to buy and aren't sure what to do, contact a lender and find out what you qualify for and what programs best meet your needs. Don't know any lenders? Contact us and we can put you in contact with our trusted lending partners. 

Want more information? Contact us anytime at 949-444-1601.

July 26, 2022

July 2022 Real Estate Market Update - What a Difference a Year Makes

 

 

IN COMPARING THIS YEAR TO LAST YEAR, THE HOUSING MARKET IS PROFOUNDLY DIFFERENT WITH HIGHER MORTGAGE RATES, MORE AVAILABLE HOMES, MUCH LOWER DEMAND, AND SIGNIFICANTLY 

LONGER MARKET TIMES. 

 

The tell-tale signs that the market has changed are all here. OPEN HOUSE directional arrows now adorn busy intersections, and it is common to see the same OPEN HOUSE for multiple weekends in a row. The number of price reductions is rapidly growing, indicating buyers’ sensitivity to pricing. Sales prices are no longer stretching tens of thousands of dollars above asking prices. The heydays of 2020, 2021, and the first few months of this year are gone. We wondered when the insanity would end and now we know. The rapidly appreciating, insanely hot housing market has transformed into a completely different, much slower Slight Seller’s Market that requires a much different strategy and approach to find success. 

 

The Orange County housing market has transitioned from an Expected Market Time (the number of days between hammering in the FOR-SALE sign to opening escrow) of 19 days in March to 72 days today. Anything below 60-days is considered a Hot Seller’s Market. Below 40-days is insane, and at 19-days it is nothing short of nuts, almost instantaneous. That is where buyers trip over each other to see every home that enters the fray, sellers call all the shots, multiple offers and bidding wars are the norm, and home values uncontrollably skyrocket higher. Yet today, the Expected Market Time has risen to 72 days, a Slight Seller’s Market, where sellers still get to call more of the shots, but there are fewer multiple offers, home values are not appreciating that fast, the market is no longer instant, and properly pricing is absolutely crucial to find success. 

 

 

What happened in just a few short months? When mortgage rates climbed from 3.25% at the start of the year to over 6% in June, home affordability took a massive hit, buyers backed off, and demand dropped. Year-over-year, demand (the number of pending sales over the prior 30- days) is down by 40%, or 1,119 fewer pending sales. In fact, Orange County demand is at its lowest level since tracking began in 2004, slightly lower than the start of the housing meltdown in 2007.

 

 

It is down in every price range, including luxury, due to Wall Street volatility. Demand is down the most (by more than 50%) in the lower price ranges, homes priced below $750,000, where higher mortgage rates and qualifying for loans has had a deeper impact. 

 

 

It took a while this year to feel the transformation in the inventory due to starting 2022 with a record low 954 homes on the market. The 3-year average start prior to COVID (2017 to 2019) was 4,665 homes. As rates continued to rise, demand diminished and the active inventory continuously rose, unabated, since January. In mid-May, there were more homes on the market compared to the prior year for the first time since August 2019. The unrelenting rise in rates slowed demand further and the inventory climbed significantly since May. 

 

 

The inventory is now up 59% compared to last year, or 1,504 extra. Every price range has a lot more homes available to purchase, other than homes priced below $500,000. Due to values rising substantially over the past year, there are fewer homes worth less than a half a million dollars, thus the drop of 24%. There are significantly more homes available between $750,000 and $1 million, 79% more, or an extra 443. Between $1 million and $2 million there are more than double the number of homes that were available at the end of July 2021. 

 

Many sellers are approaching housing as if nothing has changed. They are stretching the asking price and testing the market as if home values are continuing to rocket higher. Unfortunately, OVERPRICED homes are now quite common. An astonishing 35% of all homes available to purchase today have reduced their asking price at least once. It was at 19% in May. These price reductions are not indicative of a drop in home values; instead, it illustrates the volume of sellers who initially price their homes out of bounds, much higher than their true Fair Market Value. In the process these overpriced sellers lose out on the most valuable marketing period, the first couple of weeks after placing their home on the market. 

 

ATTENTION SELLERS: Carefully arriving at the Fair Market Value by scrutinizing the most recent comparable and pending sales is essential to be successful, meticulously taking into consideration the condition, location, and amenities. Overzealous sellers who require future price reductions will procure fewer interested buyers, fewer offers to purchase, and, ultimately, will net less money. 

Every time the housing market transitions away from a Hot Seller’s Market, too many homeowners fall victim to waiting to sell. They do not understand the magnitude of the current market shift and how quickly the market has evolved so far in 2022, and where it is going from here. Many will be kicking themselves as they learn the hard way what it is like to sell in a much slower market during the second half of this year. It will be a case of “you snooze you lose,” as many sellers will have an extremely hard time finding success. 

 

ATTENTION BUYERS: While the market is slower than the start of the year, it is NOT a Buyer’s Market where values are going down. Homes that are upgraded, in great condition, and priced well will fly off the market. The longer a home has been on the market, the more willing a seller is to negotiate. 

June 20, 2022

Home Price Deceleration Doesn’t Mean Home Price Depreciation

 

 

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. To help clarify what’s happening with home prices and where experts say they’re going, here’s a look at a few terms you may hear:

 

Appreciation is when home prices increase.

Depreciation is when home prices decrease.

Deceleration is when home prices continue to appreciate but at a slower pace.

 

Where Home Prices Have Been in Recent Years

For starters, you’ve probably heard home prices have skyrocketed over the past two years, but homes were actually appreciating long before that. You might be surprised to learn that home prices have climbed for 122 consecutive months (see graph below):

 

 

As the graph shows, houses have gained value consistently over the past 10 consecutive years. But since 2020, the increase has been more dramatic as home price growth accelerated.

So why did home prices climb so much? It’s because there were more buyers than there were homes for sale. That imbalance put upward pressure on home prices because demand was high and supply was low.

 

Where Experts Say Home Prices Are Going

While this is helpful context, if you’re a buyer or seller in today’s market, you probably want to know what’s going to happen with home prices moving forward. Will they continue that same growth path or will home prices fall?

Experts are forecasting ongoing appreciation, just at a decelerated 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 (see graph below):

 

 

Mark Fleming, Chief Economist at First American, identifies a key reason why home prices won’t depreciate or drop:

In today’s housing market, demand for homes continues to outpace supply, which is keeping the pressure on house prices, so don’t expect house prices to decline.”

 

And although housing supply is starting to tick up, it’s not enough to make home prices decline because there’s still a gap between the number of homes available for sale and the volume of buyers looking to make a purchase.

 

Terry Loebs, Founder of the research firm Pulsenomics, notes that most real estate experts and economists anticipate home prices will continue rising. As he puts it:

“With home values at record-high levels and a vast majority of experts projecting additional price increases this year and beyond, home prices and expectations remain buoyant.”

 

Bottom Line

Experts forecast price deceleration, not depreciation. That means home prices will continue to rise, just at a slower pace. Let’s connect so you can get the full picture of what’s happening with home prices in our local market and to discuss your buying and selling goals.