Are Home Prices Going To Come Down?

Are Home Prices Going To Come Down?

Today's headlines about home prices can be confusing. Some predict a market correction, but what does that mean? Danielle Hale, Chief Economist at Realtor.com, explains:

“In stock market terms, a correction is generally referred to as a 10 to 20% drop in prices . . . We don't have the same established definitions in the housing market.”

In the current housing market, a correction doesn't mean a dramatic fall in prices. It indicates that prices, which have been increasing rapidly, are now growing at a slower pace. Prices vary by local market, but a significant drop isn't happening on a national level.

The Real Estate Market Is Normalizing

From 2020 to 2022, home prices soared due to high demand, low interest rates, and a shortage of homes. However, such aggressive growth couldn't last forever. Today, price growth is slowing, indicating a normalizing market. Case-Shiller data shows that after being flat for a few months last year, prices are increasing nationally but at a slower rate.

What’s Next for Home Prices?

According to Marco Santarelli, Founder of Norada Real Estate Investments:

“Expert forecasts lean towards a moderation in home price growth over the next five years. This translates to a slower and more sustainable pace of appreciation compared to the breakneck speed witnessed in recent years, rather than a freefall in prices.”

It's all about supply and demand. Increasing inventory and limited buyer demand due to high mortgage rates will continue to ease upward pressure on prices.

What This Means for You

If you're thinking about buying a home, slowing price growth is good news. The rapid price increases during the pandemic priced out many potential buyers. Slowing price gains and lower mortgage rates can make homeownership more achievable. Odeta Kushi, Deputy Chief Economist at First American, says:

“While housing affordability is low for potential first-time home buyers, slowing price appreciation and lower mortgage rates could help — so the dream of homeownership isn't boarded up just yet.”

Bottom Line

At the national level, home prices are not going down, and most experts forecast moderate growth moving forward. However, prices vary by local market. A trusted real estate agent can provide insights into our area. If you have questions about the Atlanta market, reach out to Wieloch Goldstein at Compass.

Link to sources like Realtor.com, Case-Shiller data, and quotes from real estate experts for credibility.