THREE GRAPHS THAT SHOW THAT HOME PRICES ARE NOT FALLING

Data shows home prices are not falling

Late last year, some housing experts projected a 2023 crash in home prices. The media hyped up these forecasts with doom and gloom headlines.

This made some people put their plans to move on hold for fear home values would come tumbling down like they did in 2008. It’s your job to use data and visuals to show them that didn’t actually happen.

Let’s clear the air and get to the facts. Despite the media’s stormy predictions, home prices didn’t crash – not even close. The real data tells a different story.

Take a look at this graph showing three trusted sources, and you’ll see that prices bounced back quickly after experiencing only minor declines last year (see graph below):

This proves the declines we did see weren’t dramatic but were short-lived. As Nicole Friedman, a reporter at the Wall Street Journal, explains it:

“Home prices aren’t falling anymore. . . the residential real-estate downturn is turning out to be shorter and shallower than many housing economists expected. . .”

Basically, the worst home price declines are behind us. Nationally, home prices have rebounded and are still rising.

The slow return to seasonal normality

Here's what to expect.

Home prices follow a predictable seasonal trend and that trend is what’s starting to happen this year.

Just like the changing of the seasons, the housing market has its own cycles. To get a clear picture of what’s normal for the market, let’s go back in time for a moment.

Check out the graph below – it’s based on Case-Shiller data from 1973 to 2022 (unadjusted for seasonality). It’ll help you explain how home prices usually change throughout the year:

At the beginning of the year, home prices grow, but not as much as they do in the spring and summer markets. That’s because the market is less active in January and February since fewer people move at that time of year.

As the market transitions into the peak homebuying season in the spring, activity ramps up, and home prices go up a lot more in response. Then, as fall and winter approach, activity eases again. Price growth slows, but still typically appreciates. That’s what we’re starting to see – deceleration of appreciation, not depreciation. 

Now, look at this next graph. It takes the graph from above on the long-term trend and adds in the latest numbers available for this year. That way it’s even easier to tell the story. The black bars represent the average home price movement over 49 years, while the green bars show what’s happening this year:

Prices are still going up, just a bit slower. Sometimes the media gets it wrong, thinking slower growth means prices are dropping.

That’s not true – it’s just that appreciation is happening at a more typical pace.

Bottom Line

I don’t want to pretend that this is an easy market.   Interest rates are high, and homes are less affordable.  But the axiom in our business is “marry the house, date the rate”.   We believe that prices will hold steady or increase a bit, and that once rates drop (maybe in a couple of years, prices will balloon again, because there just isn’t enough on the market to allow prices to fall.   If you buy now, at that time, I’ll be there to recommend a refinance at a better rate.  When you're ready to sell, we hope you'll have built a lot of equity.

Call me any time, with any question or concerns.  I’m always available.