Here’s what you need to know about home prices in our housing market.
Today, we’re delving into a current hot topic: Are home prices falling? Over the past year, we’ve witnessed a significant market correction, which was expected due to the unsustainable year-over-year appreciation of 15% to 25%. However, a lot of news articles are making dramatic claims about home values depreciating. Let’s clarify the reality behind this.
What’s actually happening is more about the normal seasonality in the real estate market. For the past few years, we experienced double-digit appreciation, but historically, it’s closer to 3% to 5%. The media is trying to push the idea that home prices are plummeting, but it’s important to understand three key phrases:
1. Appreciation. This term indicates that home values are rising. It signifies an increase in your home’s worth.
“There’s no need for concern about actual home values dropping; it’s a natural part of the yearly cycle.”
2. Depreciation. Conversely, depreciation means the value of your home is decreasing, making it worth less in the future.
3. Deceleration of appreciation. The reality right now is the deceleration of appreciation. Home values are still appreciating, just not at the staggering rates of 15% to 25%. It’s more in line with the historical norm of 3% to 5%.
To put this into perspective, think of it as a drive through the mountains. You may slow down as you climb the peaks, but you’re still moving upwards, not reversing. There’s no need for concern about actual home values dropping; it’s a natural part of the yearly cycle. If you have more questions about your home’s appreciation or other real estate topics, please call or email us. We’d be happy to assist you.