Cervone Deegan + Associates knows that fall has begun and now the end of the year is officially in sight and too far off in the distance. This has many people asking what is in store for home prices in the new year and experts have started to make their predictions. The forecasts are proving to be positive news for homeowners who may have thought the future was going to be grim.
In recent years homes have been appreciating quite rapidly as we all know. Predictions for next year’s home price appreciation are coming in at an average of 2.5% by forecasters including Fannie Mae, HPES, Freddie Mac, MBA, NAR, and Zelman. Zelman & Associates was the only entity that projected a small depreciation of 3%.
Financial expert, Dave Ramsey sums it up by saying “The root issue of what drives house prices almost always is supply and demand .”
The two main factors that play into this are that there still is an ongoing lack of supply of housing options that we are experiencing across the country. While rates increasing will weaken buying power, there is still a large pool of buyers who are eager to make a home purchase with few options. Inventory levels are below a 6 month supply which is telling us that we still remain in a seller’s market for now.
The other factor that plays a role in the forecast for demand is who is making up a large pool of buyers. That pool is millennials and they make up the second largest demographic behind baby boomers and they are amidst their peak buying years.
In the end, nobody has a crystal ball to tell us exactly how things will play out and what markets will experience which trends. However, when we look at some of these important elements making up today’s real estate market landscape it looks like we can expect home prices to still appreciate just not as greatly as we have seen in recent years.