Data shows home prices are not falling
This made some people put their plans to move on hold for fear home values would come tumbling down like they did in 2008. It’s your job to use data and visuals to show them that didn’t actually happen.
This proves the declines we did see weren’t dramatic but were short-lived. As Nicole Friedman, a reporter at the Wall Street Journal, explains it:
“Home prices aren’t falling anymore. . . the residential real-estate downturn is turning out to be shorter and shallower than many housing economists expected. . .”
Basically, the worst home price declines are behind us. Nationally, home prices have rebounded and are still rising.
The slow return to seasonal normality
Home prices follow a predictable seasonal trend and that trend is what’s starting to happen this year.
Just like the changing of the seasons, the housing market has its own cycles. To get a clear picture of what’s normal for the market, let’s go back in time for a moment.
Check out the graph below – it’s based on Case-Shiller data from 1973 to 2022 (unadjusted for seasonality). It’ll help you explain how home prices usually change throughout the year:
At the beginning of the year, home prices grow, but not as much as they do in the spring and summer markets. That’s because the market is less active in January and February since fewer people move at that time of year.
As the market transitions into the peak homebuying season in the spring, activity ramps up, and home prices go up a lot more in response. Then, as fall and winter approach, activity eases again. Price growth slows, but still typically appreciates. That’s what we’re starting to see – deceleration of appreciation, not depreciation.
Now, look at this next graph. It takes the graph from above on the long-term trend and adds in the latest numbers available for this year. That way it’s even easier to tell the story. The black bars represent the average home price movement over 49 years, while the green bars show what’s happening this year:
Prices are still going up, just a bit slower. Sometimes the media gets it wrong, thinking slower growth means prices are dropping.
That’s not true – it’s just that appreciation is happening at a more typical pace. Explain this to your clients now to get ahead of the next round of confusing headlines.
Let’s ensure our clients understand the true state of the housing market and move forward with confidence.