As a real estate broker, I have been getting this question a lot lately: will home prices fall this year? No matter if you’re a potential homebuyer, seller, or both, the answer to this question matters for you. Let’s discuss what’s been happening with home prices, where experts say they’re headed, and how this impacts your homeownership goals.
What’s Happening with Home Prices?
“Price appreciation averaged 15% for the full year of 2021, up from the 2020 full year average of 6%.”
The reason we have seen prices climbing so much is because there are have been more buyers than there are homes for sale. Although we expect to see an ongoing inventory shortage, locally we have been seeing more homes list for sale.
Where Do Experts Say Prices Will Go from Here?
Experts say the housing market is not set up for a price decline. With the latest home price forecasts for 2022, they’re calling for ongoing appreciation throughout the year (see graph below):
While the experts are forecasting more moderate price appreciation, the 2022 projections show price gains will remain strong throughout this year. First American explains it like this:
“While house price growth is expected to moderate from the rapid pace of 2021, strong home buyer demand against a backdrop of historically tight inventory of homes for sale will likely keep appreciation positive in the coming year.”
What Does That Mean for You?
The biggest takeaway is that none of the experts are projecting depreciation. If you’re a homeowner who’s considering selling, the higher price appreciation over the last two years has been great for your home’s value, but it’s also something you should factor in when planning your next steps. If you’ll also be buying a home after selling, you avoid waiting for prices to fall. Waiting will only cost you more in the long run as climbing mortgage interest rates and rising prices will have an impact on your next home purchase. Freddie Mac says:
“If you’re thinking about waiting until next year and that maybe rates are higher, but you’ll get a deal on prices – well that’s risky. It may be more advantageous to purchase this year relative to waiting until 2023 at this time.”
If you’re thinking of selling to move up, you should NOT wait for prices to fall. If you’re ready, buying your next home before prices climb further may make the most financial sense. I’d be happy to discuss a strategic plan tailered to your goals to both maximize your home sale and negotiate on your next home.