Think Home Prices Are Going To Fall? Think Again

<article class="post-382928 post type-post status-publish format-standard has-post-thumbnail hentry" id="post-382928"><span class="entry-date">July 21, 2022</span><div class="entry-header center-block text-center"><h1 class="entry-title">Think Home Prices Are Going To Fall? Think Again</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=Think+Home+Prices+Are+Going+To+Fall%3F+Think+Again&amp;url=https%3A%2F%2Fgilliggroup.com%2Fblog%2Fthink-home-prices-are-going-to-fall-think-again%2F" target="_blank"><span class="force-hidden">Twitter</span></a>
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<p><img alt="Think Home Prices Are Going To Fall? Think Again | Simplifying The Market" class="webfeedsFeaturedVisual wp-post-image" decoding="async" link_thumbnail="" loading="lazy" sizes="auto, (max-width: 549px) 100vw, 549px" src="https://files.simplifyingthemarket.com/wp-content/uploads/2022/07/20110055/20220721-KCM-Share-549×300.jpg" srcset="https://files.simplifyingthemarket.com/wp-content/uploads/2022/07/20110055/20220721-KCM-Share-549×300.jpg 549w, https://files.simplifyingthemarket.com/wp-content/uploads/2022/07/20110055/20220721-KCM-Share.jpg 750w" style="display: block; margin-bottom: 5px; clear:both;max-width: 100%;" width="358"/></p>
<p>Over the last two years, the rate of home prices appreciated at a dramatic pace. While that led to incredible <a href="https://www.simplifyingthemarket.com/2022/06/21/the-average-homeowner-gained-64k-in-equity-over-the-past-year/?a=712984-fa409495d5d70154d03a25e81e9540e2">equity gains</a> for homeowners, it’s also caused some buyers to wonder if home prices will fall. It’s important to know the housing market <a href="https://www.simplifyingthemarket.com/2022/07/14/housing-experts-say-this-isnt-a-bubble/?a=712984-fa409495d5d70154d03a25e81e9540e2">isn’t a bubble</a> about to burst, and home price growth is supported by strong market fundamentals.<span id="more-46861"></span></p>
<p>To understand why price declines are unlikely, it’s important to explore what caused home prices to rise so much recently, and where experts say home prices are headed. Here’s what you need to know.</p>
<h4><strong>Home Prices Rose Significantly in Recent Years</strong></h4>
<p>The graph below uses the latest data from <a href="https://www.corelogic.com/press-releases/corelogic-data-national-home-price-gains-continue-to-exceed-20-in-may/"><em>CoreLogic</em></a> to illustrate the rise in home prices over the past year and a half. The gray bars represent the dramatic increase in the rate of home price appreciation in 2021. The blue bars show home prices are still rising in 2022, but not as quickly:</p>
<p><a href="https://files.simplifyingthemarket.com/wp-content/uploads/2022/07/20110054/20220721-MEM-Eng.png"><img alt="Think Home Prices Are Going To Fall? Think Again | Simplifying The Market" class="aligncenter wp-image-46862" decoding="async" height="488" loading="lazy" sizes="auto, (max-width: 650px) 100vw, 650px" src="https://files.simplifyingthemarket.com/wp-content/uploads/2022/07/20110054/20220721-MEM-Eng.png" srcset="https://files.simplifyingthemarket.com/wp-content/uploads/2022/07/20110054/20220721-MEM-Eng.png 960w, https://files.simplifyingthemarket.com/wp-content/uploads/2022/07/20110054/20220721-MEM-Eng-400×300.png 400w" width="650"/></a></p>
<p>You might be asking: <em>why did home prices climb so much last year?</em> It’s because there were more buyers than there were homes for sale. That imbalance put upward pressure on home prices because demand was extremely high, and supply was record low.</p>
<h4><strong>Where Experts Say Prices Will Go from Here</strong></h4>
<p>While <a href="https://www.simplifyingthemarket.com/2022/06/28/a-key-opportunity-for-homebuyers/?a=712984-fa409495d5d70154d03a25e81e9540e2">housing inventory</a> is increasing and buyer demand is softening today, there’s still a shortage of homes available for sale. That’s why the market is seeing ongoing price appreciation. Mark Fleming, Chief Economist at <em>First American</em>, <a href="https://twitter.com/YahooFinance/status/1545073046393802757">explains</a> it like this:</p>
<blockquote>
<p><em>“. . .we’re still well below normal levels of inventory and that’s why even with the pullback in demand, <strong>we still see house prices appreciating. </strong>While there is more inventory, it’s still not enough.”</em></p>
</blockquote>
<p>As a result, experts are projecting a more moderate rate of <a href="https://www.simplifyingthemarket.com/2022/06/16/home-price-deceleration-doesnt-mean-home-price-depreciation/?a=712984-fa409495d5d70154d03a25e81e9540e2">home price appreciation</a> this year, which means home prices will continue rising, but at a slower pace. That doesn’t mean prices are going to fall. As Selma Hepp, Deputy Chief Economist at <em>CoreLogic</em>, <a href="https://www.bankrate.com/real-estate/housing-market-predictions/">says</a>:</p>
<blockquote>
<p><em>“The current home price growth rate is unsustainable, and higher mortgage rates coupled with more inventory will lead to slower home price growth <strong>but unlikely declines in home prices</strong>.”</em></p>
</blockquote>
<p><strong>In other words, even with higher mortgage rates, moderating buyer demand, and more </strong><a href="https://www.simplifyingthemarket.com/2022/06/17/more-listings-are-coming-onto-the-market-infographic/?a=712984-fa409495d5d70154d03a25e81e9540e2"><strong>homes for sale</strong></a><strong>, experts say home price appreciation will slow, but prices won’t decline.</strong></p>
<p>If you’re planning to buy a home, that means you shouldn’t wait for home prices to drop to make your purchase. Instead, buying today means you can get ahead of future price increases, and benefit from the rise in prices in the form of <a href="https://www.simplifyingthemarket.com/2022/07/08/why-growing-home-equity-is-great-news-if-you-plan-to-move-infographic/?a=712984-fa409495d5d70154d03a25e81e9540e2">home equity</a>.</p>
<h3><strong>Bottom Line</strong></h3>
<p>Home prices skyrocketed in recent years because there was more demand than supply. As the market shifts, experts aren’t forecasting a drop in prices, just a slowdown in the rate of price growth. To understand what’s happening with home prices in our area, let’s connect today.</p>
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