Don’t Fall for the Next Shocking Headlines About Home Prices

<article class="post-752470 post type-post status-publish format-standard has-post-thumbnail hentry" id="post-752470"><span class="entry-date">July 25, 2023</span><div class="entry-header center-block text-center"><h1 class="entry-title">Don’t Fall for the Next Shocking Headlines About Home Prices</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=Don%E2%80%99t+Fall+for+the+Next+Shocking+Headlines+About+Home+Prices&amp;url=https%3A%2F%2Fgilliggroup.com%2Fblog%2Fdont-fall-for-the-next-shocking-headlines-about-home-prices%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="Don’t Fall for the Next Shocking Headlines About Home Prices Simplifying The Market" decoding="async" loading="lazy" src="https://media.agentaprd.com/sites/222/20230725-Don-t-Fall-for-the-Next-Shocking-Headlines-About-Home-Prices.webp" style="display: block; margin-bottom: 5px; clear: both; max-width: 100%;" width="358"/>
<p>If you’re thinking of <a href="https://www.simplifyingthemarket.com/2023/07/13/how-remote-work-expands-your-homebuying-horizons/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank">buying</a> or <a href="https://www.simplifyingthemarket.com/2023/07/14/low-housing-inventory-is-a-sweet-spot-for-sellers-infographic/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank">selling a home</a>, one of the biggest questions you have right now is probably: <em>what’s happening with home prices</em>? And it’s no surprise you don’t have the clarity you need on that topic. Part of the issue is how <a href="https://www.simplifyingthemarket.com/2023/06/20/why-the-median-home-price-is-meaningless-in-todays-market/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank">headlines</a> are talking about prices.</p>
<p>They’re basing their negative news by <a href="https://www.simplifyingthemarket.com/2023/06/12/are-home-prices-going-up-or-down-that-depends/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank">comparing</a> current stats to the last few years. But you can’t compare this year to the <a href="https://www.simplifyingthemarket.com/2023/05/30/todays-real-estate-market-the-unicorns-have-galloped-off/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank">‘unicorn’ years</a> (when home prices reached record highs that were unsustainable). And as prices begin to normalize now, they’re talking about it like it’s a bad thing and making people fear what’s next. But the worst <a href="https://www.simplifyingthemarket.com/2023/07/17/home-prices-are-rebounding/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank">home price declines</a> are already behind us. What we’re starting to see now is the return to more normal <a href="https://www.simplifyingthemarket.com/2023/07/05/two-questions-to-ask-yourself-if-youre-considering-buying-a-home/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank">home price appreciation</a>.</p>
<p><strong>To help make home price trends easier to understand, let’s focus on what’s typical for the market and omit the last few years since they were anomalies. </strong></p>
<p>Let’s start by talking about seasonality in real estate. In the housing market, there are predictable ebbs and flows that happen each year. Spring is the peak homebuying season when the market is most active. That activity is typically still strong in the summer but begins to wane as the cooler months approach. Home prices follow along with seasonality because prices appreciate most when something is in high demand.</p>
<p><span style="color: black;">That’s why, before the abnormal years we just experienced, there was a reliable long-term home price trend. The graph below uses data from </span><a href="https://www.spglobal.com/spdji/en/indices/indicators/sp-corelogic-case-shiller-us-national-home-price-nsa-index/#overview" rel="noopener noreferrer" target="_blank"><em>Case-Shiller</em></a><span style="color: black;"> to show typical monthly home price movement from 1973 through 2021 (not </span><a href="https://www.census.gov/construction/nrs/faqs/faqs_seas.html#quest2" rel="noopener noreferrer" target="_blank">adjusted</a><span style="color: black;">, so you can see the seasonality):</span></p>
<p><a href="https://www.simplifyingthemarket.com/content/images/20230724/20230725-48-year-average-monthly-home-price-movement.png?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank"><img decoding="async" src="https://files.keepingcurrentmatters.com/content/images/20230724/20230725-48-year-average-monthly-home-price-movement.png"/></a></p>
<p>As the data from the last 48 years shows, at the beginning of the year, home prices grow, but not as much as they do entering the spring and summer markets. That’s because the market is less active in January and February since fewer people move in the cooler months. As the market transitions into the peak homebuying season in the spring, activity ramps up, and home prices go up a lot more in response. Then, as fall and winter approach, activity eases again. Price growth slows, but still typically appreciates.</p>
<h4><strong>Why This Is So Important to Understand </strong></h4>
<p>In the coming months, as the housing market moves further into a more predictable seasonal rhythm, you’re going to see even more headlines that either get what’s happening with home prices wrong or, at the very least, are misleading. Those headlines might use a number of price terms, like:</p>
<ul>
<li><strong>Appreciation:</strong> when prices <em>increase</em>.</li>
<li><strong>Deceleration of appreciation:</strong> when prices <em>continue to appreciate, but at a slower or more moderate pace.</em></li>
<li><strong>Depreciation:</strong> when prices <em>decrease</em>.</li>
</ul>
<p>They’re going to mistake the slowing home price growth (deceleration of appreciation) that’s typical of market seasonality in the fall and winter and think prices are falling (depreciation). Don’t let those headlines confuse you or spark fear. Instead, remember it’s normal to see a deceleration of appreciation, slowing home price growth, as the months go by.</p>
<h3>Bottom Line</h3>
<p>If you have questions about what’s happening with home prices in your area, connect with a trusted real estate professional.</p>
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