Based on recent findings from Fannie Mae, nearly a quarter of individuals maintain the belief that home prices will decline. If you’re among those concerned about this possibility, here’s what you should understand.
Much of this apprehension likely stems from media reports or online content. However, it’s crucial to keep in mind that negative news tends to attract attention. Consequently, you might not be receiving the complete perspective but rather a sensationalized version. As Jay Thompson, a Real Estate Industry Consultant, elucidates:
“Housing market headlines are everywhere. Many are quite sensational, ending with exclamation points or predicting impending doom for the industry.
Clickbait, the sensationalizing of headlines and content, has been an issue since the dawn of the internet, and housing news is not immune to it.”
Home Prices Rose the Majority of the Past Year
Case-Shiller releases a report each month on the percentage of monthly home price changes. If you look at their data from January 2023 through the latest numbers available, here’s what you’d see:
Case-Shiller: Prices
What stands out to you when observing this graph? It largely depends on which color draws your attention. If you focus on the green, you’ll notice that home prices experienced an upward trend for the majority of the past year.
However, if the red catches your eye, you might only pay heed to the two minor declines. This tendency is often mirrored in media coverage. Given the preference for negative news, highlighting these slight downturns occurs frequently. Yet, this narrow focus overlooks the broader context.
Here’s the true message conveyed by this data: there’s considerably more green indicating price increases than red indicating decreases. Moreover, even the instances of decline are so marginal that they appear almost flat. Viewing the year in its entirety, home prices still registered an overall increase.
It’s customary in the housing market for the pace of home price growth to ease during the winter months. This phenomenon arises from reduced mobility during the holiday season and early in the year, resulting in diminished pressure on home prices. Consequently, even the green bars toward the year’s end depict smaller price gains.
In essence, the overarching narrative is one of rising prices last year, not a decline. To encapsulate the insights from the data presented in the graph above, Case Shiller, the data source, articulates it as follows:
“Month-over-month numbers were relatively flat, . . . However, the annual growth was more significant for both indices, rising 7.4 percent and 6.6 percent, respectively.”
If one of the expert organizations tracking home price trends says the very slight dips are nothing to worry about, why be concerned? Even Case-Shiller is drawing your attention to how those were virtually flat and how home prices actually grew over the year.
Bottom Line:
The data shows that, as a whole, home prices rose over the past year. If you have questions about what’s happening with home prices in your local area, connect with a trusted real estate professional.