What You Really Need To Know About Home Prices
Last updated on May 1st, 2024 at 06:36 am
According to recent data from Fannie Mae, almost 1 in 4 people still think home prices are going to come down. If you’re one of the people worried about that, here’s what you need to know.
A lot of that fear is probably coming from what you’re hearing in the media or reading online. But here’s the thing to remember. Negative news sells. That means, you may not be getting the full picture. You may only be getting the clickbait version. As Jay Thompson, a Real Estate Industry Consultant, explains:
“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.”
Here’s a look at the data to set the record straight.
Home Prices Rose the Majority of the Past Year
Case-Shiller releases a report each month on the percent 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:
But, if you’re drawn to the red, you may only focus on the two slight declines. This is what a lot of media coverage does. Since negative news sells, drawing attention to these slight dips happens often. But that loses sight of the bigger picture.
Here’s what this data really says. There’s a lot more green in that graph than red. And even for the two red bars, they’re so slight, they’re practically flat. If you look at the year as a whole, home prices still rose overall.
It’s perfectly normal in the housing market for home price growth to slow down in the winter. That’s because fewer people move during the holidays and at the start of the year, so there’s not as much upward pressure on home prices during that time. That’s why, even the green bars toward the end of the year show smaller price gains.
The overarching story is that prices went up last year, not down.
To sum all that up, the source for that data in the graph above, Case Shiller, explains it like this:
“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.
Frequently Asked Questions for “What You Really Need To Know About Home Prices”:
- What does the Case-Shiller Index indicate about home prices in the past year?
- Why do some people believe that home prices will decrease?
- This belief largely stems from negative media coverage and sensational headlines, which often focus on minor price declines to attract attention. Such reports can create a skewed perception of the housing market, leading some to believe that prices are falling when, in fact, the overall trend is upward.
- Are the slight declines in home prices shown on the graph a cause for concern?
- No, the slight declines represented in the graph are not a cause for concern. These minor dips are typical market adjustments and do not reflect a long-term downward trend. The Case-Shiller Index data shows that these declines are minimal and that the overall annual growth in home prices is significant [1, 3].
- How does the time of year affect home prices?
- Home prices can be influenced by seasonal trends. Typically, the housing market experiences slower growth during the winter months due to fewer people moving during the holidays and the start of the year. This seasonal slowdown can result in less upward pressure on home prices, leading to smaller gains or slight declines during these periods [1, 3].
- What should potential home buyers or sellers take away from the latest home price data?
- Potential home buyers and sellers should understand that despite occasional dips, the overall trend in home prices is upward. It’s important to look beyond sensational headlines and focus on comprehensive data like that from the Case-Shiller Index, which shows sustained growth in home prices over the past year. This indicates a healthy housing market, making it a potentially good time to buy or sell, depending on individual circumstances [1, 3].
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.
