What's Going To Happen with Home Prices This Year?

By
Real Estate Agent with HomeSmart 0561240

After almost two years of double-digit increases, many experts thought home price appreciation would decelerate or happen at a slower pace in the last quarter of 2021. However, the latest Home Price Insights Report from CoreLogic indicates while prices may have plateaued, appreciation has definitely not slowed. The following graph shows year-over-year appreciation throughout 2021. December data has not yet been released.

Whats
As the graph shows, appreciation has remained steady at around 18% over the last five months.

In addition, the latest S&P Case-Shiller Price Index and the FHFA Price Index show a slight deceleration from the same time last year it’s just not at the level that was expected. However, they also both indicate there's continued strong price growth throughout the country. FHFA reports all nine regions of the country still experienced double-digit appreciation. The Case-Shiller 20-City Index reveals all 20 metros had double-digit appreciation.

Why Haven't We Seen the Deeper Deceleration Many Expected?

Experts had projected the supply of housing inventory would increase in the last half of 2021 and buyer demand would decrease, as it historically does later in the year. Since all pricing is subject to supply and demand, it seemed that appreciation would wane under those conditions.

Buyer demand, however, did not slow as much as expected, and the number of listings available for sale dropped instead of improved. The graph below uses data from realtor.com to show the number of available listings for sale each month, including the decline in listings at the end of the year.

Whats
Here are three reasons why the number of active listings didn't increase as expected:

1. There hasn't been a surge of foreclosures as the forbearance program comes to an end.

2. New construction slowed considerably because of supply chain challenges.

3. Many believed more sellers would put their houses on the market once the concerns about the pandemic began to ease. However, those concerns have not yet disappeared. A recent article published by com explains:

Before the omicron variant of COVID-19 appeared on the scene, the 2021 housing market was rebounding healthily from previous waves of the pandemic and turned downright bullish as the end of the year approached. . . . And then the new omicron strain hit in November, followed by a December dip in new listings. Was this sudden drop due to omicron, or just the typical holiday season lull?

No one knows for sure, but it does seem possible.

Bottom Line

Home price appreciation might slow (or decelerate) in 2022. However, based on supply and demand, you shouldn't expect the deceleration to be swift or deep.

 

 

Posted by

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“YOUR Rock-Solid Choice Realtor for Making Home Sellers a Profit & Home Buyers Equity”

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Comments (8)

Bill Salvatore - East Valley
Arizona Elite Properties - Chandler, AZ
Realtor - 602-999-0952 / em: golfArizona@cox.net

Great information Shayne, thanks for the post. bill

Jan 15, 2022 05:56 AM
Eric Bouler
Gardner Realtors, Licensed in La. - New Orleans, LA
Listening to your Needs

Lots of information about prices in your area. I think it will be different in some other areas....

Jan 15, 2022 06:00 AM
Ed Silva
Mapleridge Realty, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

In our area, home prices seem to have hit a plateau, but I believe it is more a matter of inventory levels and sellers appreciating that they do not have to put it out there excessively high to fish

Jan 15, 2022 07:08 AM
Kristin Johnston - REALTOR®
RE/MAX Platinum - Waukesha, WI
Giving Back With Each Home Sold!

Great information.  Thanks for sharing and have a wonderful day!

Jan 15, 2022 07:14 AM
Gwen Fowler-864-710-4518 SC * Mountain* Lake*Home
Gwen Fowler Real Estate, Inc - Walhalla, SC
Gwen Fowler Real Estate, Inc.

Great Information, our number of new listings for the area is less than 50 per day, and yesterday a 6.5 million dollar house went on the market in the morning and was under contract by the end of the day.  I wish I could predict the market; I would be rich!!

Jan 15, 2022 09:00 AM
Hannah Williams
HomeStarr Realty - Philadelphia, PA
Expertise NE Philadelphia & Bucks 215-820-3376

Shayne Stone  The market has slowed because of the holidays and people getting ready to do their taxes a norm for this time of year, but I do not believe we will see a decline in prices-  no supply     Great info   

Jan 15, 2022 09:31 AM
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Shayne Stone I don't have a crystal ball, but all indications seem to be pointing to another year of increasing home prices.

Jan 15, 2022 12:24 PM
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Shayne, the lenders were quick to state the interest rates were rising, but no word yet.

Jan 15, 2022 05:05 PM