Home prices are holding strong, despite media hype about a potential crash. It’s important to use data and visuals to show the truth. The reality is that home prices didn’t come tumbling down as some feared. Let’s use the facts to clear the air and reassure your clients.
The recent declines in home prices were brief and not severe. According to Nicole Friedman of the Wall Street Journal, the residential real estate downturn was shorter and milder than expected. In essence, the most significant home price drops are now in the past. Nationally, home prices have recovered and continue to increase.
Just like the changing seasons, the housing market has its own cycles. To understand what’s normal for the market, let’s take a look at historical data. The graph below, based on Case-Shiller data from 1973 to 2022, shows how home prices typically fluctuate throughout the year. This will provide a clear picture of the normal seasonal trend in the market.
At the start of the year, home prices increase, but not as much as they do in the spring and summer markets due to lower activity in January and February.
As the market moves into the peak homebuying season in the spring, activity intensifies, leading to greater price increases. Then, as fall and winter approach, activity eases, and price growth slows down, but still appreciates. This reflects a deceleration of appreciation, not depreciation.
Now, take a look at the graph below. It combines the long-term trend with the latest available numbers for this year, making it even easier to illustrate the story. The black bars represent the average home price movement over 49 years, while the green bars depict this year’s trends.
Prices are still on the rise, just at a more moderate pace. It’s important to clarify to your clients that slower growth does not mean prices are dropping. It simply means that appreciation is occurring at a more typical rate. Let’s make sure to understand this to stay ahead of any misleading headlines.
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Shirin Rezania Ramos | 858.345.0685 | www.shirinramos.com | Compass, DRE 0203379
