As our market moves through spring, prices are appreciating at a normal rate again. Here’s what that means for buyers and sellers.
What’s the latest news from our market as we move through spring? What’s going on with home prices?
According to the Home Price Expectation Survey from the first quarter of this year, the pre-bubble (1987-1999) average annual appreciation rate was 3.6%. During the bubble period (2000-2007), it rose to 7.1%. During the bust period (2007-2012), it dropped to -6.1%. Then, during the recovery (2012-2018), it bounced back up to 6.2%.
Throughout 2018, the appreciation rate decreased at a steady pace, and at the start of January of this year, it was at 3.6%. Last month, I said that analysts were predicting that home prices would not depreciate any further, but rather keep appreciating at a normal rate.
At the moment, some think the appreciation rate will drop below the 3.6% mark, while others think that because we got off to such a great start this year, appreciation will be even stronger than what was originally expected moving forward. In any case, the situation is normalizing in terms of prices, which is exactly what I predicted would happen last year.
Between now and 2023, the same survey showed that experts predict homes will appreciate by 17.1% on average. The most optimistic think they’ll increase by as much as 28.3%, while the more cautious still think they’ll rise by at least 6.6%. In any case, no one is predicting depreciation of any kind.
How are buyers reacting to this trend? What’s motivating renters to become homeowners?
People who buy homes build equity (i.e., wealth). At 3:21 in the video above, you can see an NAR report that shows the tremendous equity gains homeowners who’ve bought in the last 30 years have acquired, and their net worth is far greater than any renter’s.
Based on these appreciation rate projections, between now and 2023, average home equity is expected to increase by $42,617. It’s no small wonder, then, that 73% of all millennials plan to buy a home in the next five years.
Their biggest challenge is low inventory, but because inventory is so low, more and more new construction homes are being built, and existing home sellers have to compete with this.
Danielle Hale, Chief Economist at Realtor.com, says, “Sellers have to think about the competition in a way they haven’t before. Getting ahead of other potential sellers could be even more of a bigger advantage this year given market conditions.”
So if you’re thinking of putting your home on the market, get ahead of the competition so you can increase your odds of selling for top dollar.
To learn all you need to know about how to sell quickly and for top dollar, I invite you to sign up for my next Home Selling Sharks seminar on June 18. To find out all the details, visit www.homesharkseminar.com. You can also order a copy of my book “How to Fight the Home Selling Sharks” on Amazon.
As always, if you have any other questions about our market or you have any real estate needs, don’t hesitate to reach out to me. I’d love to help you.