If you’re thinking about moving, you’re probably wondering what’s going on with home prices right now. Despite what you might hear in the news, home prices across the country aren’t dropping. It’s just that the rate at which prices are going up is starting to slow down. Let me explain this in simpler terms.
In the housing market, there are regular patterns that happen each year, like ups and downs. This is called seasonality. Spring is when the most people buy homes because the market is very active. Summer is also busy, but as the weather gets cooler, fewer people buy homes. The prices of homes follow this pattern because they go up the most when a lot of people want to buy.
This is why we see a consistent long-term trend in home prices. The graph below, which uses data from Case-Shiller, shows the typical monthly movement of home prices from 1973 to 2022 (without adjusting, so you can see the seasonal changes): [Include the graph here if possible.]
Looking at the data, we can see that at the start of the year, home prices go up, but not as much as they do in the spring and summer. This is because fewer people are buying homes in January and February when it’s colder. When the spring, the busiest time for buying homes, comes around, the market becomes more active, and home prices increase significantly. As we move into fall and winter, the activity slows down again. While the growth in prices decreases, they still generally go up.After a few unusual years, where things didn’t follow the usual patterns, the current higher mortgage rates are bringing back the normal seasonal changes.
Selma Hepp, Chief Economist at CoreLogic, explains that the increased mortgage rates have slowed down the rapid price increases. Now, monthly price growth is returning to the regular seasonal patterns. In simpler terms, home prices are still going up, but they are following the usual expectations for different times of the year.
Why This Is So Important to Understand
In the next few months, you’ll hear more about home prices in the media. They might use some terms that might seem complicated, but I’ll break them down for you:
- Appreciation: This happens when home prices go up.
- Deceleration of appreciation: It means prices are still going up, but not as fast as before—more like a steady pace.
- Depreciation: This is when prices go down.
Don’t let these words confuse you, and don’t be alarmed by catchy headlines. The really fast increase in home prices we saw in recent years couldn’t keep going forever. Now, we’re seeing a slowdown, but it’s not a decrease in prices—just a slower increase.
It’s normal for home price growth to ease up as the year goes on. Slower growth doesn’t mean prices are falling; they’re just going up at a more reasonable speed.
Bottom Line
Even though the headlines might be causing worry and confusion about home prices, the reality is straightforward. The increase in home prices is going back to the usual patterns we see during different seasons. If you’re curious about what’s going on with prices in our local area, feel free to reach out, and we can discuss it.
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.
Fri, 29 Sep 2023 00:42:35 +0000
by Mottek Group