Luxury Valley Homes Scottsdale Blog

head_left_image

Is There a Shift Happening in the Real Estate Market?

Housing inventory is up year-over-year for the first time in three years which means that home price appreciation will likely begin to slow. If you're looking to buy or sell a home, now is still a great time! Let's get together today to go over what this shift in the market means for you. [September 27, 2018]

 

Watch the short video on the Shift.

 

 

 

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.

 

You may also be interested in the article that follows:

 

Jeff DaleyHow Does the Supply of Homes for Sale Impact Buyer Demand - The price of any item is determined by the supply of that item, as well as the market’s demand for it. The National Association of REALTORS (NAR) surveys “over 50,000 real estate practitioners about their expectations for home sales, prices and market conditions” for their monthly REALTORS Confidence Index. Their latest edition sheds some light on the relationship between seller traffic (supply) [...]

 

 

  

Luxury Valley Home Registered TrademarkJane Daley, BA
Jeff Daley, PhD
Luxury Valley Homes - West USA
Scottsdale Real Estate Arizona
Our Luxury Valley Home Team
480-595-6412

Comment balloon 1 commentJane & Jeff Daley, PhD • October 01 2018 10:39PM
Is There a Shift Happening in the Real Estate Market?
share
Housing inventory is up year-over-year for the first time in three years which means that home price appreciation will likely begin to slow. If you're looking to buy or sell a home, now is still a great time! Let's get together today to go over what… more
Is Housing Affordable? | Watch short Video
share
Is housing affordable? - As home prices continue to rise due to a lack of inventory, many people are becoming more concerned about housing affordability. Taking a look at NAR's Housing Affordability Index puts that concern to rest. Let's get… more
Rising Home Prices Help Build Family Wealth
share
Rising home prices - As home prices continue to appreciate, many potential buyers and sellers aren't sure what it really means for them. It's important to understand, however, that rising prices also means rising equity. If you're wondering what… more
Flooding Damage | Are We at Risk in Scottsdale?
share
Flooding damage - Floods are a common and costly natural hazard in Arizona. Whether caused by heavy rain, monsoons, or the remnants of tropical storms, the results of flooding damage can be devastating. While some floods develop over time, flash… more
Special Forces Part 1 - From Birth to Present Day
share
Special Forces Part 1 - From Birth to Present Day - The first Special Forces groups originated from an elite combined Canadian-American unit that fought in the Aleutians, Italy, and southern France. It was nicknamed the Devils Brigade, and formed on… more
Supply-Demand Will Determine Future Home Values
share
Supply-Demand - Will home values continue to appreciate throughout 2018? The answer is simple: YES! – as long as there are more purchasers in the market than there are available homes for them to buy. This is known as the theory of “supply and… more
Americans Rank Real Estate Best Investment for 5 Years Running
share
Americans Rank Real Estate Some Highlights: Real estate has outranked stocks/mutual funds, gold, savings accounts/CDs, and bonds as the best long-term investment among Americans for the last 5 years! The generations agree! Real estate is the… more
Retirement - Will Your House Fit Your Needs When Your Ready?
share
Retirement - As more and more baby boomers enter retirement age, the question of whether or not to sell their homes and move will become a hot topic. In today’s housing market climate, with low available inventory in the starter and trade-up home… more
Get The Best Price | Here is Two Ways When Selling Your Home
share
Get the best price - Every homeowner wants to make sure that they maximize their financial reward when selling their home, but how do you guarantee that you receive the maximum value for your house? Get The Best Price Here are two ways to ensure… more
4 Reasons To Buy A Home | Is Buying a Home a Good Idea?
share
4 reasons to buy a home - We often talk about why it makes financial sense to buy a home, but more often than not, the emotional reasons are the more powerful or compelling ones. No matter what shape or size your living space is, the concept and… more