Are Home Prices Going To Come Down?

<article class="post-1138278 post type-post status-publish format-standard has-post-thumbnail hentry" id="post-1138278"><span class="entry-date">July 29, 2024</span><div class="entry-header center-block text-center"><h1 class="entry-title">Are Home Prices Going To Come Down?</h1><div class="shareBlock"><div class="shareTitle">Share</div><div class="shareIcons"><a aria-label="Twitter Share Link" class="twitter solid display-inline-block" data-tracking="Post,Social Post Link Clicked,Twitter" href="http://twitter.com/share?text=Are+Home+Prices+Going+To+Come+Down%3F&url=https%3A%2F%2Fgilliggroup.com%2Fblog%2Fare-home-prices-going-to-come-down%2F" target="_blank"><span class="force-hidden">Twitter</span></a>
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</div></div><div class="post-tax post-category"><span></span><a href="../category/realtor-blog/index.html" rel="tag">Realtor Blog</a></div><div class="post-tax post-post_tag"></div></div><div class="entry-content"><div><img alt="Are Home Prices Going To Come Down? Simplifying The Market" decoding="async" loading="lazy" src="https://media.agentaprd.com/sites/222/20240729-Are-Home-Prices-Going-To-Come-Down-original.webp" style="display: block; margin-bottom: 5px; clear: both; max-width: 100%;" width=""/>
<p>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.</p>
<p>Here’s what Danielle Hale, Chief Economist at <em>Realtor.com</em>, <a href="https://money.com/housing-market-correction-federal-reserve/" rel="noopener noreferrer" style="color: blue;" target="_blank">says</a>:</p>
<blockquote><p> <em>“In stock market terms, a correction is generally referred to as a 10 to 20% drop in prices . . . </em><strong><em>We don’t have the same established definitions in the housing market.</em></strong><em>”</em></p></blockquote>
<p>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. <strong>Prices vary a lot by local market, but rest assured, a big drop off isn’t what’s happening at a national level.</strong></p>
<h4><strong>The Real Estate Market Is Normalizing</strong></h4>
<p>From 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.</p>
<p>Today, price growth has started to slow down, which is a sign the market is beginning to normalize. The most recent <a href="https://www.spglobal.com/spdji/en/indices/indicators/sp-corelogic-case-shiller-20-city-composite-home-price-nsa-index/#news-research" rel="noopener noreferrer" style="color: blue;" target="_blank">data</a> from <em>Case-Shiller</em> 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 (<em>see graph below</em>):</p>
<p><a href="https://files.keepingcurrentmatters.com/KeepingCurrentMatters/content/images/20240726/20240729-Home-Prices-Are-Moderating-original.png" rel="noopener noreferrer" target="_blank"><img alt="No Caption Received" decoding="async" src="https://files.keepingcurrentmatters.com/KeepingCurrentMatters/content/images/20240726/20240729-Home-Prices-Are-Moderating-original.png"/></a>The big takeaway? So far this year, there’s been a much healthier pace of price growth compared to the pandemic.</p>
<p>Of course, that’s what’s happening now, but you may be wondering what’s next for prices. Marco Santarelli, the Founder of <em>Norada Real Estate</em> <em>Investments</em>, <a href="https://www.noradarealestate.com/blog/real-estate-forecast-next-5-years/" rel="noopener noreferrer" style="color: blue;" target="_blank">says</a>:</p>
<blockquote><p><em>“</em><strong><em>Expert forecasts lean towards a moderation in home price growth over the next five years.</em></strong><em> 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.”</em></p></blockquote>
<p>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.</p>
<h4><strong> What This Means for You</strong></h4>
<p><strong> </strong>If you’re thinking about <a href="https://www.simplifyingthemarket.com/2024/07/19/the-biggest-mistakes-homebuyers-are-making-right-now/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" style="color: blue;" target="_blank">buying a home</a>, slowing price growth is welcome news. Skyrocketing home prices during the pandemic left many would-be homebuyers feeling priced-out. </p>
<p>While it’s still a good thing to know the <a href="https://www.simplifyingthemarket.com/2024/07/03/homeowners-gained-28k-in-equity-over-the-past-year/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" style="color: blue;" target="_blank">value</a> of the home you buy will likely continue to <a href="https://www.simplifyingthemarket.com/2024/07/02/real-estate-still-holds-the-title-of-best-long-term-investment/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" style="color: blue;" target="_blank">go up</a> once you own it, slowing price gains are making things feel <a href="https://www.simplifyingthemarket.com/2024/07/18/unlocking-homebuyer-opportunities-in-2024/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" style="color: blue;" target="_blank">more manageable</a>. Odeta Kushi, Deputy Chief Economist at <em>First American</em>, <a href="https://x.com/NatMortgageNews/status/1810856489231217052" rel="noopener noreferrer" style="color: blue;" target="_blank">says</a>:</p>
<blockquote><p><em>“While housing affordability is low for potential first-time home buyers, </em><strong><em>slowing price appreciation and lower mortgage rates could help</em></strong><em> — so the dream of homeownership isn’t boarded up just yet.”</em></p></blockquote>
<h3>Bottom Line</h3>
<p>At 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 <a href="https://www.simplifyingthemarket.com/2024/07/15/why-working-with-a-real-estate-professional-is-crucial-right-now/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" style="color: blue;" target="_blank">real estate agent</a> comes into play. If you have <a href="https://www.simplifyingthemarket.com/2024/07/16/how-to-determine-if-youre-ready-to-buy-a-home/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" style="color: blue;" target="_blank">questions</a> about what’s happening with prices in your area, reach out to an agent.</p>
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