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  • The Mullin Group

Don’t Fall for the Next Shocking Headlines About Home Prices

If you're considering buying or selling a home, one of the burning questions on your mind is likely, "What's the current situation with home prices?" We understand that gaining a clear perspective on this topic can be challenging, especially with the way headlines are portraying it. The truth is this real estate market is one of the strongest in our lifetime.

Many media outlets tend to present negative news by comparing present statistics with those of the last few years. However, it's essential to recognize that such comparisons might not be fair, as those "unicorn" years were marked by unsustainable record-high home prices. Now that prices are gradually normalizing, they are being painted in a negative light, leading to unnecessary fear about the future. The good news is that the most significant declines in home prices have already occurred, and we're witnessing a return to more typical home price appreciation.

To make home price trends easier to grasp, let's shift our focus to what's customary in the market and set aside the last few years since they were exceptional cases.

Let's begin by discussing seasonality in the real estate market. Throughout the year, the housing market experiences predictable ebbs and flows. Spring is the peak homebuying season when the market is most active. This heightened activity often extends into the summer but gradually eases as the cooler months approach. Home prices align with this seasonality because they tend to appreciate most when demand is high.

Before the anomaly of recent years, there existed a reliable long-term home price trend. The graph below, utilizing data from Case-Shiller spanning from 1973 to 2021 (not adjusted, so you can see the seasonality), illustrates the typical monthly home price movement:

The data from the past 48 years shows that at the start of the year, home prices grow, though not as dramatically as they do during the spring and summer markets. This is because the market experiences lower activity in January and February, with fewer people moving during the colder months. However, as the market transitions into the peak homebuying season in the spring, activity intensifies, resulting in more substantial home price appreciation. Then, as fall and winter approach, activity eases again, and while price growth slows, appreciation is still the norm.

Why This Is So Important to Understand

Understanding this trend is crucial for the coming months as the housing market settles into a more predictable seasonal rhythm. We anticipate that you'll encounter numerous headlines that might misinterpret what's happening with home prices or, at the very least, be misleading. These headlines might use various price terms, such as:

  • Appreciation: Signifying price increases.

  • Deceleration of appreciation: Denoting a continued appreciation, but at a slower or more moderate pace.

  • Depreciation: Referring to price decreases.

Some of these headlines may mistake the standard seasonal slowing of home price growth (deceleration of appreciation) that occurs during fall and winter and falsely imply falling prices (depreciation). Don't let such headlines confuse you or instill fear. Instead, keep in mind that a deceleration of appreciation and slowing home price growth is entirely normal as the months progress.

The Mullin Message

Headlines are typically designed on purpose to elicit dramatic emotional responses. The truth of the matter is that all real estate is hyper local and a headline may not actually reflect what's going on with your specific home and neighborhood. There are also MANY creative ways to navigate our current market environment and design a customized solution to get you exactly what you want. Message us today to get started!

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