Are Home Prices Softening or Are They Falling?

Dated: 10/03/2018

Views: 11

Are Home Prices Softening or Are They Falling? | Simplifying The MarketAre Home Prices Softening or Are They Falling?

  First Time Home BuyersFor BuyersFor SellersHousing Market UpdatesMove-Up BuyersPricing

We are beginning to see reports that more housing inventory is coming to the market and that buyer demand may not be increasing at the same pace it did earlier this year. The result will be many headlines written to address the impact that these two situations will have on home values.

Many of these headline writers will confuse “softening home prices” with “falling home prices,” but there is a major difference between the two.

The data will begin to show that home values are not appreciating at the same levels as they had over the last several years (softening prices). This does NOT mean that prices are depreciating (falling prices).

Here is an example: Over the last several years, national home values increased by more than 6% annually. If you had a home worth $300,000 at the beginning of the year, it would be worth $318,000 by year’s end. If the appreciation rate “falls” to 4%, that $300,000 house would be worth $312,000 at the end of next year – a $6,000 difference.

The price of the home did not fall. It just didn’t increase at the level it had the previous year.

Appreciation rates are projected to end this year at approximately 5%, and then drop to somewhere between 4-5% next year. This drop in appreciation rate will cause home price increases to soften.

Again, this does not mean that home prices will depreciate, but instead that they will appreciate more slowly.

Bottom Line

Be careful when reading headlines that discuss home values. Some headline writers will be legitimately confused and will use the word falling in place of softening. Others will realize that the headline “Home Prices are Falling!” will get more clicks than “Home Prices are Softening” and will intentionally write the more compelling headline. Read the article. If the word depreciation is not mentioned, home values are not falling.

SEARCH FOR HOMES in North Texas
SEARCH FOR NEW CONSTRUCTION
RELOCATING? See how the different areas compare!
SOURCE: Guy & Joi McKinney KCM Blog

Blog author image

Guy and Joi McKinney

Welcome to Our Real Estate Information and Search Site! Triple Crown Real Estate Group is For All Your Real Estate Needs! Our purpose is to help you reach your dreams & goals! After many years of buyi....

Latest Blog Posts

Baby Boomers are Downsizing, Are You Ready to Move North Texas?

For a while now baby boomers have been blamed for a portion of the housing market’s current lack of housing inventory, but should they really be getting the blame?Here’s what some of the

Read More

Are We About to Enter a Buyers’ Market?

Are We About to Enter a Buyers’ Market? Thursday October 4th, 2018  First Time Home Buyers, For Buyers, For Sellers, Housing Market Updates, Move-Up

Read More

Which States is It Cheaper to Buy vs. Rent

Buying a Home is Cheaper than Renting in 38 States! [INFOGRAPHIC] Friday October 5th, 2018SEARCH FOR HOMES in North Texas SEARCH FOR NEW CONSTRUCTION RELOCATING? See how the different

Read More

Are Home Prices Softening or Are They Falling?

Are Home Prices Softening or Are They Falling?Thursday, September 27th, 2018  First Time Home Buyers, For Buyers, For Sellers, Housing Market Updates, Move-Up Buyers,

Read More