Leave a Message

Thank you for your message. We will be in touch with you shortly.

Think Home Prices Are Going To Fall? Think Again

Think Home Prices Are Going To Fall? Think Again
Over the last two years, the rate of home prices appreciated at a dramatic pace. While that led to incredible equity gains for homeowners, it’s also caused some buyers to wonder if home prices will fall. It’s important to know the housing market isn’t a bubble about to burst, and home price growth is supported by strong market fundamentals.
 
To understand why price declines are unlikely, it’s important to explore what caused home prices to rise so much recently, and where experts say home prices are headed. Here’s what you need to know.
 
Home Prices Rose Significantly in Recent Years
 
The graph below uses the latest data from CoreLogic to illustrate the rise in home prices over the past year and a half. The gray bars represent the dramatic increase in the rate of home price appreciation in 2021. The blue bars show home prices are still rising in 2022, but not as quickly:
 
Think Home Prices Are Going To Fall? Think Again | MyKCM
 
You might be asking: why did home prices climb so much last year? It’s because there were more buyers than there were homes for sale. That imbalance put upward pressure on home prices because demand was extremely high, and supply was record low.
 
Where Experts Say Prices Will Go from Here
 
While housing inventory is increasing and buyer demand is softening today, there’s still a shortage of homes available for sale. That’s why the market is seeing ongoing price appreciation. Mark Fleming, Chief Economist at First Americanexplains it like this:
 
“. . .we’re still well below normal levels of inventory and that’s why even with the pullback in demand, we still see house prices appreciating. While there is more inventory, it’s still not enough.”
 
As a result, experts are projecting a more moderate rate of home price appreciation this year, which means home prices will continue rising, but at a slower pace. That doesn’t mean prices are going to fall. As Selma Hepp, Deputy Chief Economist at CoreLogicsays:
 
“The current home price growth rate is unsustainable, and higher mortgage rates coupled with more inventory will lead to slower home price growth but unlikely declines in home prices.”
 
In other words, even with higher mortgage rates, moderating buyer demand, and more homes for sale, experts say home price appreciation will slow, but prices won’t decline.
 
If you’re planning to buy a home, that means you shouldn’t wait for home prices to drop to make your purchase. Instead, buying today means you can get ahead of future price increases, and benefit from the rise in prices in the form of home equity.
 
Bottom Line
 
Home prices skyrocketed in recent years because there was more demand than supply. As the market shifts, experts aren’t forecasting a drop in prices, just a slowdown in the rate of price growth. To understand what’s happening with home prices in our area, let’s connect today.

Recent Blog Posts

Stay up to date on the latest real estate trends.

Why Home Sales Bounce Back After Presidential Elections

With the 2024 Presidential election fast approaching, you might be wondering what impact, if any, it’s having on the housing market.

Planning To Sell Your House in 2025? Start Prepping Now

By starting your prep work early, you’ll give yourself plenty of time to get your house market-ready by the end of the year.

Two Reasons Why the Housing Market Won’t Crash

Demand for homes still outpaces supply, and unemployment remains low. And these are two key factors that will help prevent the housing market from crashing any time so… Read more

The Down Payment Assistance You Didn’t Know About

Believe it or not, almost 80% of first-time homebuyers qualify for down payment assistance, but only 13% actually use it.

East Bay Newsletter - Sept. 2024

Nationally, the monthly cost of financing a median-priced home was 8.3% lower in August 2024 than in June because the median home price declined 2.1% over the past two… Read more

San Francisco Newsletter - Sept. 2024

In August, the average 30-year mortgage rate declined for the third month to 6.35%, a 0.87% drop from the 2024 high reached in early May. The Fed is expected to cut ra… Read more

San Francisco Market Update - August 2024

Nationally, home prices hit an all-time high in June 2024, and we estimate that prices may have bucked seasonal trends and climbed slightly higher in July.

East Bay Market Update - August 2024

In July, the average 30-year mortgage rate declined for the third month, falling to 6.78%, a 0.44% drop from the 2024 high reached in early May. The Fed is poised to s… Read more

Are You "Buy-Curious"?

Join Elevation Real Estate and JVM Lending as they make the case that now may be a good time to buy rather than continue renting. An event that promises to be a game-c… Read more

Let’s Talk

You’ve got questions and we can’t wait to answer them.