Towards the end of the year there were news reports suggesting a significant decline, in home prices for 2023. This caused concern among people leading them to question whether we would face a housing crisis akin to the one experienced in 2008. However it turns out that those news stories were not entirely accurate.
While there was a decrease in home prices following a period of growth in previous years it’s important to note that the decline was not nationwide. In fact home prices remained comparatively resilient. Did not drop drastically as anticipated by many individuals.
Now lets compare the predictions made by experts at the end of year, with their assessments. This exercise will demonstrate that even experts themselves acknowledge that their earlier predictions carried a outlook.
Expert Home Price Forecasts: Then and Now
This image illustrates the home price predictions, for 2023 by seven organizations. It showcases their forecasts made towards the end of 2022 regarding the expected changes in home prices by the years end along with their updated forecasts, for 2023.
As you can see in the middle column marked in red, all the experts initially predicted that home prices would go down. However, if you look at the right column, you’ll notice that all of them have changed their predictions for the end of the year. They now expect that home prices will either stay the same or go up, which is a significant shift from their original negative forecasts.
There are several reasons why home prices are not dropping as expected. According to Odeta Kushi, who is the Deputy Chief Economist at First American, there are some key factors at play:
- Long-Term Fixed-Rate Debt: In the United States, many homeowners have mortgages with fixed interest rates that last a long time. This means that their monthly mortgage payments don’t change even if inflation goes up. This stability protects homeowners from sudden increases in their housing costs.
- Inflation Hedge: Owning a home can act as a hedge against inflation. Inflation is when prices for goods and services go up over time. With a fixed-rate mortgage, your main housing expense stays the same even when other prices are rising.
- Downside Stickiness: This means that home prices in the U.S. tend to resist going down too much. They are “sticky” on the downside, which means they don’t fall dramatically even when there are economic challenges.
So, these factors are helping to keep home prices from dropping as much as originally feared.
A Look Forward To Get Ahead of the Next Headlines
You might come across more misleading news about home prices in the coming months. This happens because home price trends follow a seasonal pattern, and some news outlets might misinterpret it. Here’s what you should know to stay informed and not get alarmed by negative headlines.
Towards the end of each year, the housing market tends to slow down, and this includes a slowdown in the rate at which home prices are increasing. However, this doesn’t mean that home prices are actually going down.
It just means that they are not rising as rapidly as they were during the peak homebuying season.In simpler terms, when you see a “deceleration of appreciation,” it doesn’t mean that home prices are decreasing. It just means they are not going up as fast as they were before, which is a normal seasonal trend in the housing market.
Bottom Line
Headlines can certainly have an impact, even if they turn out to be untrue. Despite the media’s predictions that home prices would drop significantly at the end of last year, that scenario did not materialize. It’s important to have a reliable source of information to help you distinguish between fact and fiction based on trustworthy data.
If you want to stay well-informed and have access to dependable information, it’s a good idea to connect with a trusted resource that can provide you with accurate and up-to-date data on the housing market and related topics. This way, you can make informed decisions and avoid being swayed by misleading headlines.
Find out why Kaya Homes is the leader in Long Island Real Estate and are your go-to realtor in the Lynbrook, Oceanside, Malverne, Hewlett, Valley Stream, East Rockaway, Woodmere, Cedarhurst, Baldwin, North Woodmere, Woodsburgh, Hewlett Neck Hewlett Harbor, Bellmore,Wantagh,Merrick and Freeport area.
Wed, 20 Sep 2023 23:47:02 +0000
