Why Home Prices Keep Going Up

<article class="post-829524 post type-post status-publish format-standard has-post-thumbnail hentry" id="post-829524"><span class="entry-date">October 23, 2023</span><div class="entry-header center-block text-center"><h1 class="entry-title">Why Home Prices Keep Going Up</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=Why+Home+Prices+Keep+Going+Up&amp;url=https%3A%2F%2Fgilliggroup.com%2Fblog%2Fwhy-home-prices-keep-going-up%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="Why Home Prices Keep Going Up Simplifying The Market" decoding="async" loading="lazy" src="https://media.agentaprd.com/sites/222/20231023-Why-Home-Prices-Keep-Going-Up.webp" style="display: block; margin-bottom: 5px; clear: both; max-width: 100%;" width="358"/>
<p>If you’ve ever dreamed of buying your own place, or selling your current house to upgrade, you’re no stranger to the rollercoaster of emotions changing <a href="https://www.simplifyingthemarket.com/2023/10/11/the-latest-expert-forecasts-for-home-prices-in-2023/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank">home prices</a> can stir up. It’s a tale of financial goals, doubts, and a dash of anxiety that many have been through.</p>
<p>But if you put off moving because you’re worried home prices might drop, make no mistake, they’re not going down. In fact, it’s just the opposite. National <a href="https://www.blackknightinc.com/data-reports/?" rel="noopener noreferrer" target="_blank">data</a> from several <a href="https://www.zillow.com/research/data/" rel="noopener noreferrer" target="_blank">sources</a> says they’ve been <a href="https://www.freddiemac.com/research/indices/house-price-index" rel="noopener noreferrer" target="_blank">going up</a> consistently this year (<em>see graph below</em>):</p>
<p> <a href="https://www.simplifyingthemarket.com/content/images/20231018/20231023-Percent-Change-In-Home-Values.png?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank"><img decoding="async" src="https://files.keepingcurrentmatters.com/content/images/20231018/20231023-Percent-Change-In-Home-Values.png"/></a></p>
<p></p>
<p>Here’s what this graph shows. In the first half of 2022, home prices rose significantly (<em>the green bars on the left side of the graphs above</em>). Those increases were dramatic and unsustainable.</p>
<p>So, in the second half of the year, prices went through a correction and started dipping a bit (<em>shown in red</em>). But those slight declines were shallow and short-lived. Still, the media really focused on those drops in their headlines – and that created a lot of fear and uncertainty among consumers.</p>
<p>But here’s what hasn’t been covered fully. So far in 2023, prices are going up once more, but this time at a more normal pace (<em>the green bars on the right side of the graphs above</em>). And after price gains that were too high and then the corrections that followed in 2022, the fact that all three reports show more normal or typical price appreciation this year is good news for the housing market.</p>
<p>Orphe Divounguy, Senior Economist at <em>Zillow</em>, <a href="https://www.zillow.com/research/total-market-value-2023-33031/" rel="noopener noreferrer" target="_blank">explains</a> changing home prices over the past 12 months this way: </p>
<blockquote><p><em>“The U.S. housing market has surged over the past year after a temporary hiccup from July 2022-January 2023. . . . </em><strong><em>That downturn has proven to be short lived as housing has rebounded impressively so far in 2023. . .</em></strong><em>”</em></p></blockquote>
<p>Looking ahead, home price appreciation typically starts to ease up <a href="https://www.simplifyingthemarket.com/2023/09/26/the-return-of-normal-seasonality-for-home-price-appreciation/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank">this time of year</a>. As that happens, there’s some risk the media will confuse slowing price growth (deceleration of appreciation) with home prices falling (depreciation). Don’t be fooled. Slower price growth is still growth.</p>
<h4><strong>Why Are Home Prices Increasing Now?</strong></h4>
<p><strong>One reason why home prices are going back up is because there still </strong><a href="https://www.simplifyingthemarket.com/2023/09/29/explaining-todays-low-housing-supply-infographic/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank"><strong>aren’t enough homes</strong></a><strong> for sale for all the people who want to buy them. </strong></p>
<p>Even though higher <a href="https://www.simplifyingthemarket.com/2023/10/16/are-higher-mortgage-rates-here-to-stay/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank">mortgage rates</a> cause <a href="https://www.simplifyingthemarket.com/2023/09/15/plenty-of-buyers-are-still-active-today-infographic/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank">buyer demand</a> to moderate, they also cause the <a href="https://www.simplifyingthemarket.com/2023/09/27/why-todays-housing-inventory-shows-a-crash-isnt-on-the-horizon/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank">supply of available homes</a> to go down. That’s because of the mortgage rate lock-in effect. When rates rise, some homeowners are reluctant to sell and lose their current low mortgage rate just to take on a higher one for their next home.</p>
<p>So, with higher mortgage rates impacting both buyers and sellers, the supply and demand equation of the housing market has been affected. But since there are still more people who want to purchase homes than there are <a href="https://www.simplifyingthemarket.com/2023/09/14/why-is-housing-inventory-so-low/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank">homes available to buy</a>, prices continue to rise. As <em>Freddie Mac</em> <a href="https://www.freddiemac.com/research/forecast/20230921-overall-economic-growth-has-been-resilient" rel="noopener noreferrer" target="_blank">states</a>: </p>
<blockquote><p><em>“While rising interest rates have reduced affordability—and therefore demand—they have also reduced supply through the mortgage rate lock-in effect. </em><strong><em>Overall, it appears the reduction in supply has outweighed the decrease in demand, thus house prices have started to increase</em></strong><em> . . .”</em></p></blockquote>
<h4><strong>Here’s How This Impacts You</strong></h4>
<ul>
<li><strong>Buyers</strong>: If you’ve been waiting to <a href="https://www.simplifyingthemarket.com/2023/10/04/understanding-the-benefits-of-owning-your-first-home/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank">buy a home</a> because you were afraid its value might drop, knowing that home prices have gone back up should make you feel better. <a href="https://www.simplifyingthemarket.com/2023/10/06/how-homeowner-net-worth-grows-with-time-infographic/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank">Buying a home</a> gives you a chance to own something that usually becomes <a href="https://www.simplifyingthemarket.com/2023/10/02/unpacking-the-long-term-benefits-of-homeownership/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank">more valuable over time</a>.</li>
<li><strong>Sellers</strong>: If you’ve been holding off on selling your house because you were worried about how changing home prices would impact its value, it could be a smart move to work with a <a href="https://www.simplifyingthemarket.com/2023/10/09/key-skills-you-need-your-listing-agent-to-have/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank">real estate agent</a> and put your house <a href="https://www.simplifyingthemarket.com/2023/09/15/plenty-of-buyers-are-still-active-today-infographic/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank">on the market</a>. You don’t have to wait any longer because the most recent data indicates home prices have turned in your favor.</li>
</ul>
<h3>Bottom Line</h3>
<p>If you put off moving because you were worried that home prices might go down, data shows they’re <a href="https://www.simplifyingthemarket.com/2023/10/03/home-prices-are-not-falling/" rel="noopener noreferrer" target="_blank">increasing</a> across the country. Work with a local real estate agent to understand how home prices are changing in your local area.</p>
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