What Every Seller Should Know About Home Prices
If you’re trying to decide whether or not to sell your house, recent headlines about home prices may be on your mind. And if you're now questioning how those stories will affect your home's value, here's what you should know.
What’s Really Happening with Home Prices?
You might have seen headlines about a decline in home values or prices, but it's crucial to remember that those stories are created to get attention with just a few words. But headlines cannot always tell the complete story.
Home prices have decreased a bit in some areas recently, but they have increased when looking at data from the past year nationwide. The graph below uses the latest data from S&P Case-Shiller to help tell the story of what’s actually happening in the housing market today:
As the graph shows, true home price growth has moderated in recent months (shown in green) as buyer demand has pulled back in response to higher mortgage rates. This is what the headlines are drawing attention to today.
Although moderating in recent months, home prices are still growing at a rate well above the "normal" market growth we saw prior to 2006.
As you can see from the bars representing data from January 2019 through mid-2020, home prices typically rose by around 3–4% each year during that time. Even though prices this year have only increased by 10% compared to last year, it is still significant.
What Does This Mean for Your Home’s Equity?
Your home's value has likely appreciated by 10% in the last year, which is still a significant amount compared to normal levels of appreciation (3–4%).
The big takeaway? Don’t let the headlines get in the way of your plans to sell. Over the past two years alone, you’ve likely gained a substantial amount of equity in your home as home prices climbed. Even though home price moderation will vary by market moving forward, you can still use the boost your equity got to help power your move.
As Mark Fleming, Chief Economist at First American, says:
“Potential home sellers gained significant amounts of equity over the pandemic, so even as affordability-constrained buyer demand spurs price declines in some markets, potential sellers are unlikely to lose all that they have gained.”
If you're curious about your home's value or how much equity you have, reach out to me so we can chat. I'll be more than happy to provide my expert opinion.