Importance of Pricing in Selling Your House
Recent home price news may be on your mind if you're looking to decide whether or not to sell your house. Here's what you need to know about what they really mean for the value of your house.
What Is Really Going on with The Home Prices?
You may have read news articles indicating a decline in house values or a price decline for homes, but it's crucial to keep in mind that those headlines are meant to convey a lot of information in a short amount of time. Headlines, though, aren't always the best at giving a whole picture.
Home values are up countrywide on a year-over-year basis, despite the fact that home prices are down somewhat month-over-month in several locations. The graph below illustrates current market conditions in the housing sector using the most recent data from S&P Case-Shiller:
As the graph demonstrates, it is accurate to say that the rise in housing prices has slowed recently (green line), fewer people are buying homes as a result of increased mortgage rates. Today's headlines are calling attention to this.
But the broader, longer-term picture is what you should pay attention to. Although the rise in home prices month over month is slowing, the percentage of appreciation year over year is still significantly higher than the shift in home prices we observed in years when the market was more stable.
The bars from January 2019 to mid-2020 demonstrate that an annual increase in property prices of roughly 3-4% was more usual (see bars for January 2019 through mid-2020). However, even the most recent figures for this year indicate that costs have increased by about 10% compared to last year.
What Does This Mean for the Equity in Your Home?
While you might not be able to benefit from the 20% appreciation we experienced in early 2022, the value of your property has increased by 10% compared to the previous year. This increase is still significant when compared to the more typical appreciation rate of 3-4%.
The main lesson? Don't allow the headlines interfere with your sales goals. You most certainly have accumulated a sizeable amount of equity in your house over the last two years alone due to rising property prices. Even if future market conditions will cause house price moderation to vary, you can still utilize the gain to your equity to support your relocation.
According to First American's Chief Economist Mark Fleming:
“Potential home sellers gained significant amounts of equity over the pandemic, so even as affordability-constrained buyer demand spurs price declines in some markets, potential sellers are unlikely to lose all that they have gained.”
Let's connect so you may get guidance from a professional if you have any inquiries regarding property pricing or how much equity you have in your existing residence.