Don’t Let the Latest Home Price Headlines Confuse You
Based on what you’re hearing in the news about home prices, you may be worried they’re falling. But here’s the thing. The headlines aren’t giving you the full picture. If you look at the national data for 2023, home prices actually showed positive growth for the year. While this varies by market, and while there were some months with slight declines nationally, those were the exception, not the rule. The overarching story is that prices went up last year, not down. Let’s dive into the data to set the record straight. 2023 Was the Return to More Normal Home Price Growth If anything, last year marked a return to more normal home price appreciation. To prove it, here’s what usually happens in residential real estate. In the housing market, there are predictable ebbs and flows that take place each year. It’s called seasonality. It goes like this. Spring is the peak homebuying season when the market is most active. That activity is usually still strong in the summer, but begins to wane toward the end of the year. Home prices follow along with this seasonality because prices grow the most when there’s high demand. The graph below uses data from Case-Shiller to show how this pattern played out in home prices from 1973 through 2022 (not adjusted, so you can see the seasonality): As the data shows, for nearly 50 years, home prices match typical market seasonality. At the beginning of the year, home prices grow more moderately. That’s because the market is less active as fewer people move in January and February. Then, as the market transitions into the peak homebuying season in the spring, activity ramps up. That means home prices do too. Then, as fall and winter approach, activity eases again and prices grow, just at a slower rate. Now, let’s layer the data that’s come out for 2023 so far (shown in green) on top of that long-term trend (still shown in blue). That way, it’s easy to see how 2023 compares. As the graph shows, moving through the year in 2023, the level of appreciation fell more in line with the long-term trend for what usually happens in the housing market. You can see that in how close the green bars come to matching the blue bars in the later part of the year. But the headlines only really focused on the two bars outlined in red. Here’s the context you may not have gotten that can really put those two bars into perspective. The long-term trend shows it’s normal for home prices to moderate in the fall and winter. That’s typical seasonality. And since the 49-year average is so close to zero during those months (0.10%), that also means it’s not unusual for home prices to drop ever so slightly during those times. But those are just blips on the radar. If you look at the year as a whole, home prices still rose overall. What You Really Need To Know Headlines are going to call attention to the small month-to-month dips instead of the bigger year-long picture. And that can be a bit misleading because it’s only focused on one part of the whole story. Instead, remember last year we saw the return of seasonality in the housing market – and that’s a good thing after home prices skyrocketed unsustainably during the ‘unicorn’ years of the pandemic. And just in case you’re still worried home prices will fall, don’t be. The expectation for this year is that prices will continue to appreciate as buyers re-enter the market due to mortgage rates trending down compared to last year. As buyer demand goes up and more people move at the same time the supply of homes for sale is still low, the upward pressure on prices will continue. Bottom Line Don’t let home price headlines confuse you. The data shows that, as a whole, home prices rose in 2023. If you have questions about what you’re hearing in the news or about what’s happening with home prices in our local area, let’s connect.
12 Most Commonly Asked Real Estate Questions
1. Is now a good time to sell? Yes! Home prices are still expected to slowly increase and buyers are still out there ready to purchase. 2. How much is my house worth? Two things: Your home can have an appraised value and a market value. An appraiser can come to your house and tell you a figure of what the literal house and property is worth, however the market value could differ. To figure out what it would sell for at the time you list it, we will look at comparable homes that have sold in your area and get an approximate price of how much you could get. 3. What are some things I need to do to get my house ready for sale? Declutter, clean, and freshen up the curb appeal. Get rid of the extra junk that a buyer doesn’t need or want to see. Dust, vacuum, mop, clear countertops, and make the beds and couches look presentable. And last but not least, freshen up the curb appeal by possibly adding new mulch or plants to a garden bed outside, pressure wash the driveway, or add a fresh coat of paint to the front door. Impress buyers right away before they even walk inside. If they don’t like what they see on the outside, they won’t even bother walking in. 4. Would it be wise for me to have a home inspection done before listing my house? It isn’t required to have an inspection done before you list your home for sale, however, it could help you as the seller better understand the condition of the home, how much you should price it at, and if there are any repairs that need to be made beforehand to move the sale along. Ultimately, it’s not necessary but if you have an old home that hasn’t been looked at in a while by a professional, it could help you. 5. How long do you think it will take to sell my house? According to the DMAAR year end 2022 housing market reports, the average days on market was 52 days. From the data that we have so far from January to October 2023, the average days on market is 48 days so it is slightly lower than last year by a few days. 6. What’s the initial step in purchasing a home? Reach out to a mortgage lender and get pre-approved for a home loan. Once you know how much money you can get for your loan, then we can help you shop for your dream home. If you need recommendations of which lenders to reach out to, call us and we’ll lead you in the right direction. 7. What are my options if my offer is turned down? If you are a buyer and you put in an offer on a home that isn’t accepted, don’t worry! We can help you find other properties and negotiate your next offer. Also, things happen. Even if your offer isn’t initially accepted, it doesn’t always mean everything is final. Some times things fall through and don’t work out so don’t give up right away. In the meantime, we can help you find your next dream home and hope for the best! 8. How does my agent get paid when buying a house? When Realtors represent buyers, they are typically compensated by the seller’s broker sharing their commission. In our industry it’s referred to as co-operating brokerage agreements, which means that all the real estate brokerages agree to co-operate with each other to best serve buyers and sellers of homes. However, there are exceptions, when we represent buyers purchasing homes that are for sale by owners or through a non-co-operating real estate broker. In those instances, we will discuss compensation options with the buyer and do our best to negotiate with the seller or their representatives to include buyer representative compensation. Either way, all compensation is settled when closing on the property. 9. What if I sell my home but I’m not able to find a new one to buy? There are a variety of ways we can protect the seller and provide them time to find a home of their choice. First, when we meet with sellers to develop a strategy to sell their home, we also discuss what their requirements and wishes are in purchasing a new home and we get those plans going as soon as possible. If our seller finds a home they want prior to their house being under contract to purchase, we can use a Subject to Sale Addendum that will outline options and timeframes for the purchase of the new home that will be contingent on their current house being sold. If our seller receives an offer on their home prior to finding a home to purchase, we can create a contingency that allows the seller to find a home of their choice prior to their current home being closed. In both scenarios, the closing date is a bit uncertain until all purchase contracts are fully executed. In the unlikely event that the seller cannot find a home they like, Zealty Home Advisors has access to several short-term rentals for our clients to help them in their transition. 10. Home prices are going down. Should I wait to buy? Actually, nationally they are increasing! However, only slightly and at a slower rate. Economists and other experts predict that home loan interest rates will slightly decrease in 2024 so even though home prices are increasing, interest rates will hopefully decrease allowing more buyers to enter the market and find the home of their dreams. 11. How would you market my house for sale? First we start out by having a consultation with you to establish your needs and goals. Do you want to sell quickly or do you want the highest dollar amount? Would you like a 3-D rendering of your home done so potential buyers can get a virtual tour of your home online of would you prefer in-person home showings? After we discuss the important things, we will have a professional photographer take photos of your home so we can price it and list it on our website and start showing your home to buyers. We will also post a preview of your home on social media to get it more attention. 12. How frequently and by which methods do you communicate with your real estate clients? We can call, text, email or meet in person if necessary. However, we are easier to reach via call or text due to us driving and showing homes or meeting with other clients. *This house is not actually for sale. It is a stock image with an added for sale sign in the front of it.*
How to Sell Your House in 2023 (Part 2)
At Zealty Home Advisors, it is our utmost priority to make sure our clients have the best home buying and selling experience possible as well as getting the best results. In this short series, we break down the entire process of how we will help you put your home on the market and get the most success out of your home sale. In case you missed it, make sure to watch our part one video here. If you’re planning to sell your home in the near future, it is important to declutter, stage, and photograph your home. If you list your home for sale with us at Zealty Home Advisors, we will hire a professional stager if necessary and we will photograph your home to make sure it’s advertised in the best way possible. 1. Declutter. Get rid of those knick knacks and miscellaneous items on counters, shelves, and floors to give the incoming potential buyers the best first impression of the home. The goal is to help them imagine themselves living in the home. If there is too much clutter or personalized items lying around, it can make it hard to envision that picture. 2. Stage. Most times we will use the furniture you already have and we can help suggest the best way to arrange it to make for the best photos or best use of space in the room. 3. Take photos. Included with working with us, we will hire a professional photographer to come to your property and take photos, videos, 3-D renderings, or drone footage of your home that will best sell the property to potential buyers. If you have a small home with a small backyard, it isn’t necessary to have drone footage versus someone who is selling an acreage of land on the lake. If you are considering selling your home and have any questions on what you need to do to get started, we are happy to help! Give us a call at (515) 329-4667 and we’d be glad to assist and get the process going.
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