Friday, September 2, 2022 / by Laura Larson
To have a better understanding of what is going on with the housing market, let's see the differences between these concepts:
Appreciation is when home prices increase.
Depreciation is when home prices decrease.
Deceleration is when home prices continue to appreciate but at a slower or more moderate pace.
There is an expert consensus that the current state of the real estate market is one of slowdown. As a result, housing values are rising, but not at the record-breaking rate we witnessed over the past couple of years. According to CoreLogic data, home prices nationwide increased by an average of 15% in 2021. Home price growth this year is expected to slow to an average rate of 10 to 11%, according to analysts.
From January to March of this year, housing prices increased by 19–20% compared to the same period last year. However, the rate of that appreciation has slowed down to 18%. This indicates that albeit at a lesser rate than the previous year, home prices are still increasing.
As the Monthly Mortgage Monitor from Black Knight explains: “Annual home price growth dropped by nearly two percentage points...– the greatest single-month slowdown on record since at least the early 1970s...While June’s slowdown was record-breaking, home price growth would need to decelerate at this pace for six more months to drive annual appreciation back to 5%, a rate more in line with long-run averages.”
This suggests that although home prices are declining, they are still well above average, and we would need to see much more deceleration to even get back to more typical rates of home appreciation. Not a decrease in the value of homes.
The main conclusion is that housing prices are just slowing down or moderating. Nationally, home values are still anticipated to rise. Furthermore, none of the experts predict that home prices would decline or net depreciate.
If you are considering buying and/or selling your home and have questions about what’s happening with home prices in your local marketplace, connect with Laura Larson Now!