Many people are wondering: will home prices fall this year? Whether you’re a potential homebuyer, seller, or both, the answer to this question matters to you. Let’s break down what’s happening with home prices, where experts say they’re headed, and how this impacts your homeownership goals.
What’s Happening with Home Prices?
Home prices have seen 121 consecutive months of year-over-year increases. Core Logic says:
“Price appreciation averaged 15% for 2021, up from the 2020 full-year average of 6%.”
So why are prices climbing so much? It’s because there are more buyers than there are homes for sale. This imbalance is expected to maintain that upward pressure on home prices because homes for sale are a hot commodity in today’s low-inventory housing market.
Where Do Experts Say Prices Will Go from Here?
Experts say the housing market isn’t set up for a price decline due to that ongoing imbalance between supply and demand. In the latest home price forecasts for 2022, they’re calling for a continued appreciation throughout the year (see graph below):
While the experts are forecasting more moderate price appreciation, the 2022 projections show price gains will remain strong throughout this year. First American explains it like this:
“While house price growth is expected to moderate from the rapid pace of 2021, strong home buyer demand against a historically tight inventory of homes for sale will likely keep appreciation positive in the coming year.”
What Does That Mean for You?
The biggest takeaway is that none of the experts are projecting depreciation. If you’re a homeowner thinking about selling, the higher price appreciation has been great for your home’s value over the last two years, but it’s also something you should factor in when planning your next steps. You shouldn’t wait for prices to fall if you are also buying a home after selling your current house. Waiting will only cost you more in the long run because climbing mortgage rates and rising home prices will impact your next home purchase. Freddie Mac says:
“If you’re thinking about waiting until next year and that maybe rates are higher, you’ll get a deal on prices – well, that’s risky. It may be more advantageous to purchase this year relative to waiting until 2023 at this time.”
You shouldn’t wait for prices to fall if you’re thinking of selling to move up. Experts say prices will continue to appreciate this year. If you’re ready, buying your next home before prices climb further may make the most financial sense.