If you’re contemplating a real estate move right now, you’re likely asking yourself: “What’s the big deal with home prices these days?” Despite the social buzz in the media suggesting otherwise, the national home price growth isn’t actually dropping but you can say that it is more or less likely that the market is stabilizing right now. Let us break this down so you can grasp the broader picture. Shall we?
Like any market out there, real estate has its natural rhythms — seasonal patterns, if you will. Spring typically sees the market at its liveliest, with lots of activity from both buyers and sellers in the real estate market. While the summer months maintain a robust pace, things usually start to cool and dwindle down (pun intended) as we enter the fall season. Home prices tend to mirror this seasonal ebb and flow, appreciating most when demand is at its peak.
That’s how we arrive at a consistent, long-term trend in home price growth. To provide a visual representation, the graph below illustrates monthly price changes from 1973 to 2022, courtesy of Case-Shiller. The data isn’t adjusted for seasonality, giving you a full, transparent view of how prices have moved over and throughout the years.
Home Price Movement in Terms of Data; The Seasonal Trend
As we’ve seen from the numbers and the data above, usually early in the year, there’s a modest uptick in home prices, but it doesn’t hold a candle to the growth we witness during the balmy spring and summer months. This trend largely happens because house-hunting tends to hibernate during the chillier and cooler months of January and February. But once the buds bloom and we hit peak homebuying season, the market buzzes to life, and home prices soar accordingly.
Come autumn and the subsequent winter chill, the pace of the buying and selling real estate market tends to cool off. Although the rate of price growth takes a breather at times, homes typically continue to appreciate their value over time. So you really don’t have to dwell too much on that when you hear the constant rumors that the housing market will soon come crashing down. I mean, we have always heard about it, but does it actually happen?
Following a few extraordinary years that felt like catching unicorns, today’s climbing mortgage rates are signaling a shift back toward traditional market cycles.
As explained by Selma Hepp, the head economist at CoreLogic:
“High mortgage rates have slowed additional price surges, with monthly increases returning to regular seasonal averages. In other words, home prices are still growing but are in line with historic seasonal expectations.”
Why It’s Crucial to Grasp This
In the months ahead, the media spotlight on home prices is bound to intensify greatly. You’re going to come across buzzwords like:
- “Appreciation“: signifying rising or an increase in property prices.
- “Deceleration of Appreciation“: means that prices are still rising, just not as quickly and as noticeable as before.
- “Depreciation“: indicating a drop or a level of decrease in property prices.
It’s essential not to get entangled in the jargon or get misled by sensational headlines of seasonal trends. The robust growth in home prices we’ve witnessed recently was never going to last forever, as you could have expected. What we’re experiencing now is a moderation of that growth rate—a deceleration of appreciation, not a decrease in value. See what I did there?
Keep in mind that it’s perfectly standard for the rate of home price increases to taper off as the year progresses. This certainly doesn’t equate to falling home prices; it simply means they are ascending at a more sustainable rate.
Closing Thoughts on Home Price Growth
Feel free to drown and ignore the noise; the media often overly amplifies fears and misconceptions regarding housing prices. The reality? Home value growth is just settling back into its typical seasonal trends or patterns like what we have discussed in this article. So, if you’re scratching your head about what’s going on with home prices right here in our community, don’t hesitate to reach out to the McT Real Estate Group Team. Let’s get together to clarify any concerns you may have and maybe take your first steps in your home-buying or selling journey.