Are Home Prices Rising or Falling?
As we head into the new year, the question on every homebuyer and seller’s mind is the same. Where will home prices go this year? Will they continue rising at rapid rates or will they begin to taper off?
According to real estate industry resource Keeping Current Matters, reports are indicating that more housing inventory is coming to the market and “buyer demand may not be increasing at the same pace it did earlier in 2018.” As a result, you will hear many rumors about this change of pace and it’s important not to confuse “softening” home prices with “falling” home prices.
While home prices are not appreciating at the same levels they had been over the past several years, which would indicate softening prices, this does not mean that prices are falling or depreciating.
For instance, you may have noticed in past years that home prices increased by more than six percent annually. That means if you purchased a Metro Atlanta home for $300,000 at the beginning of the year, it would be worth $318,000 by the end of the year. When the appreciation rate changes, say to four percent instead of the previous six percent, the price of the home would be $312,000 at the end of the year— a difference of $6,000. This does not mean that the home’s price depreciated! It simply indicates that the price of homes did not increase at the same rate it did the year before.
In 2019, the appreciation rate is expected to drop to anywhere between four and five percent. Remember that this drop means that home prices are softening, not falling! They are merely appreciating more slowly than they have in the past.
The bottom line? Take each rumor you hear or headline you read about Metro Atlanta home prices with a grain of salt. Many will confuse “softening” prices with “falling” prices as I explained above. You will want to look for the word depreciation in the articles you read. If it’s not mentioned, values are not falling.
As always, do not hesitate to reach out with any questions you have about the Metro Atlanta real estate market and what home prices look like in your area. I can always provide a snapshot of the market to help you make a decision about buying a new home or selling your current property!
I look forward to hearing from you and happy new year!
Jill Heineck
Associate Broker
Heineck & Company at Keller Williams Realty
Phone: (404) 418-9157
Email: jill@heineckandcompany.com
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