Have Home Prices Dropped

Do headlines about recent home price declines have you worried about the value of your home? Many people are waiting for the proverbial shoe to drop on housing prices. While prices have declined slightly, context is critical.

Historic Context

Let’s review historical events. Home values increased nearly 40% throughout the pandemic – which more than makes up for any recent declines. The Federal Reserve raised mortgage rates back toward more average rates pulling out of the Covid crisis. The average mortgage interest rate since the 1990s has been 7%. The average home appreciation rate since the 1990s has been 4.4%. This includes the housing market crash of 2008. Considering these data points, any home appreciation rate over 10% annually is an incredible return on investment. Being conservative, if you had two years of a 30% increase followed by a couple of years of a 3% decrease, your home value would still retain a substantial value improvement.

Location Context

Many locations in the United States have experienced a massive increase in the home price of 300% or greater since the 1990s. Of course, there has been inflation since the 1990s as well. 130%, to be exact. Considering this against the home price increase produces a 170% home value increase. Many news headlines want to grab your attention using fear tactics about your home value dropping. A 1-3% drop in value over a year will not significantly impact your ROI in light of the substantial appreciation rates that have taken place.  This is especially applicable if you have owned the property since 2020 or earlier.

In comparison, the stock market experiences daily ups and downs. Investors evaluate these with a grain of salt. Holders of any real estate asset should be reminded that every market has its ups and downs. When deciding on your primary residence, it’s a good idea to evaluate pricing and market changes with a historical and long-term strategy in mind.

Waiting for Home Prices to Drop?

If you’ve decided you want to make a real estate move but are waiting until prices drop, I hope you aren’t holding your breath. Of course, no one knows for sure what the market will do next. However, numbers reveal how and why the market is moving forward.

Right now, inventory is low. It is low enough to still be considered a “sellers market.” The neighborhood you’re in, the type of home you have, and its condition all impact how quickly and at what price your home will sell. If you would like to have your home evaluated and talk through strategies to help you obtain your goals, give us a call or schedule online.

 

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Schedule your home value consultation to help determine your adjusted home value.