Will house prices decline this year? You want to know whether you’re a prospective buyer, seller, or both. Let’s examine the current state of housing prices, where analysts predict they will go, and why this matters for your aspirations of becoming a homeowner.
The rapid increase in home prices last year wasn’t typical.
Home prices rapidly increased in 2021. One explanation is the market’s increased buyer activity due to historically low mortgage rates. Thus, more people wanted to buy houses up for sale. Due to the bidding battles that resulted, prices increased. How unusually high the appreciation was last year is explained by CoreLogic:
Price growth increased from an entire year average of 6% in 2020 to an average of 15% in 2021.
In other words, 2021’s rate of gain was significantly higher than the 6% the market saw in 2020. The appreciation rate was higher than the 3.8% pre-pandemic average. This proves that 2021 was an outlier in the property market caused by a surplus of purchasers over available properties.
Today’s home price growth is moderate.
The market’s torrid pace of house price growth during the previous two years is decreasing (or decelerating) this year. The most recent predictions from experts state that costs would still rise countrywide on average by about 10% in 2022.
Why do these experts all predict that prices will climb further? It’s easy. Even though the housing supply is increasing now, it is still low overall for several reasons, including the protracted underbuilding of dwellings. And according to analysts, this will assist sustain pressure on housing prices to rise this year. Additionally, buyer demand has decreased since mortgage rates this year are higher than last year.
Since the market is changing, this year’s price growth won’t approach the frenzied speed in 2021. However, the market’s past year’s sharp increase wasn’t sustainable.
How does this affect you?
The market is currently starting to recover its pre-pandemic levels. However, even the predicted house price rise of 10% in 2022 is much more than the 3.8% average for a stock market.
So, despite what you may have heard, analysts claim that most markets won’t see a decline in property values. Just be more modest in your appreciation.
According to experts, if you’re concerned that the property you’re attempting to sell or the house you want to purchase may lose value, you should know that most markets are only expected to see slowing, not depreciation. Therefore, although not as quickly as the previous year, your home’s value should still increase.
You shouldn’t hold off on deciding if you’re considering it till costs decrease. According to experts, prices will rise across the board this year, only more gradually. Partner with a real estate agent when you’re prepared to start the buying or selling process, so you have a local market expert at your side at every turn.