What Does the Future Hold for Home Prices?

<article class="post-61933 post type-post status-publish format-standard has-post-thumbnail hentry" id="post-61933"><span class="entry-date">October 19, 2021</span><div class="entry-header center-block text-center"><h1 class="entry-title">What Does the Future Hold for 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=What+Does+the+Future+Hold+for+Home+Prices%3F&amp;url=https%3A%2F%2Fgilliggroup.com%2Fblog%2Fwhat-does-the-future-hold-for-home-prices%2F" target="_blank"><span class="force-hidden">Twitter</span></a>
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<p><img alt="What Does the Future Hold for Home Prices? | 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/2021/10/13150257/20211019-KCM-Share-549×300.jpg" srcset="https://files.simplifyingthemarket.com/wp-content/uploads/2021/10/13150257/20211019-KCM-Share-549×300.jpg 549w, https://files.simplifyingthemarket.com/wp-content/uploads/2021/10/13150257/20211019-KCM-Share.jpg 750w" style="display: block; margin-bottom: 5px; clear:both;max-width: 100%;" width="358"/></p>
<p>If you’re looking to buy or sell a house, chances are you’ve heard talk about today’s <a href="https://www.simplifyingthemarket.com/2021/10/06/what-do-supply-and-demand-tell-us-about-todays-housing-market/?a=712984-fa409495d5d70154d03a25e81e9540e2">rising home prices</a>. And while this increase in home values is great news for sellers, you may be wondering what the future holds. Will prices continue to rise with time, or should you expect them to fall?<span id="more-45334"></span></p>
<p>To answer that question, let’s first understand a few terms you may be hearing right now.</p>
<ul>
<li>
<a href="https://www.merriam-webster.com/dictionary/appreciation"><strong>Appreciation</strong></a> is an <em>increase</em> in the value of an asset.</li>
<li>
<a href="https://www.merriam-webster.com/dictionary/depreciation"><strong>Depreciation</strong></a> is a <em>decrease</em> in the value of an asset.</li>
<li>
<a href="https://www.merriam-webster.com/dictionary/deceleration"><strong>Deceleration</strong></a> is when something happens at a <em>slower pace</em>.</li>
</ul>
<p>It’s important to note home prices have increased, or <strong>appreciated</strong>, for <a href="https://www.nar.realtor/newsroom/existing-home-sales-recede-2-0-in-august">114</a> straight months. To find out if that trend may continue, look to the experts. <a href="https://pulsenomics.com/surveys/#home-price-expectations"><em>Pulsenomics</em></a> surveyed over 100 economists, investment strategists, and housing market analysts asking for their five-year projections. In terms of what lies ahead, experts say the market may see some slight <strong>deceleration</strong>, but not <strong>depreciation</strong>.</p>
<p>Here’s the forecast for the next few years:<a href="https://files.simplifyingthemarket.com/wp-content/uploads/2021/10/13150300/20211019-MEM-Eng-1.png"><img alt="What Does the Future Hold for Home Prices? | Simplifying The Market" class="aligncenter wp-image-45336" decoding="async" height="488" loading="lazy" sizes="auto, (max-width: 650px) 100vw, 650px" src="https://files.simplifyingthemarket.com/wp-content/uploads/2021/10/13150300/20211019-MEM-Eng-1.png" srcset="https://files.simplifyingthemarket.com/wp-content/uploads/2021/10/13150300/20211019-MEM-Eng-1.png 1000w, https://files.simplifyingthemarket.com/wp-content/uploads/2021/10/13150300/20211019-MEM-Eng-1-400×300.png 400w" width="650"/></a>As the graph above shows, prices are expected to <a href="https://www.simplifyingthemarket.com/2021/09/09/home-price-appreciation-is-skyrocketing-in-2021-what-about-2022/?a=712984-fa409495d5d70154d03a25e81e9540e2">continue to rise</a>, just not at the same pace we’ve seen over the last year. <strong>Over 100 experts agree, there is no expectation for price depreciation</strong>. As the arrows indicate, each number is an increase, which means prices will rise each year.</p>
<p>Bill McBride, author of the blog <a href="https://www.calculatedriskblog.com/"><em>Calculated Risk</em></a>, also expects <strong>deceleration, </strong>but not depreciation:</p>
<blockquote>
<p><em>“My sense is the Case-Shiller National annual growth rate of 19.7% is probably close to a peak, and that year-over-year <strong>price increases will slow </strong>later this year.”</em></p>
</blockquote>
<p>Ivy Zelman of <a href="https://www.zelmanassociates.com/"><em>Zelman &amp; Associates</em></a> agrees, saying:</p>
<blockquote>
<p>“. . . home price appreciation is on the cusp of flipping to a <strong>decelerating</strong> <strong>trend</strong>.”</p>
</blockquote>
<p>A <a href="https://www.realtor.com/news/trends/is-housing-market-frenzy-going-to-cool-off-this-fall/">recent article</a> from <em>realtor.com</em> indicates you should expect:</p>
<blockquote>
<p>“. . . annual <strong>price increases will slow </strong>to a more normal level, . . .”</p>
</blockquote>
<h4><strong>What Does This Deceleration Mean for You?</strong></h4>
<p>What experts are projecting for the years ahead is more in line with the historical norm for appreciation. According to data from <em><a href="https://cdn.blackknightinc.com/wp-content/uploads/2021/04/BKI_MM_Feb2021_Report.pdf">Black Knight</a></em>, the average annual appreciation from 1995-2020 is 4.1%. As you can see from the chart above, the expert forecasts are closer to that pace, which means you should see appreciation at a level that’s aligned with a more normal year.</p>
<p>If you’re a buyer, don’t expect a sudden or drastic drop in home prices – experts say it won’t happen. Instead, think about your homeownership goals and consider purchasing a home before prices rise further.</p>
<p>If you’re a seller, the continued home price appreciation is good news for the value of your house. Work with an agent to list your house for the <a href="https://www.simplifyingthemarket.com/2021/09/03/your-agent-is-key-when-pricing-your-house-infographic/?a=712984-fa409495d5d70154d03a25e81e9540e2">right price</a> based on market conditions.</p>
<h3><strong>Bottom Line</strong></h3>
<p>Experts expect price <strong>deceleration</strong>, not price <strong>depreciation </strong>over the coming years. Let’s connect to talk through what’s happening in the housing market today, where things are headed, and what it means for you.</p>
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