2022 has been a year of disappointment. The rising inflation, coupled with the repeated shock of the Fed rate increase, has really colored the real estate sector in a bad light. And it doesn't help that the media has used words to create a FUD (Fear, Uncertainty, and Doubt) in the minds of every seller. But how much truth is there in those news prices? Here are the unbiased facts you must know about home prices as a house seller.
Revealing the Truth about Home Prices - What is Happening Behind the Scenes?
We don't blame you for worrying after seeing headlines like "Home prices in free fall" and "Can the X real estate market come back from this massive drop?". These are designed to create a sense of urgency. But these are only headlines that don't tell the full story.
While there is a month-over-month price drop (which is only slight), charts show a yearly increase in home value.
The chart below is taken from S&P case-Shiller that gives you exactly what's going on in today's market.
Yes, when you look at it from a monthly perspective, there is a slight drop, likely triggered due to the inflation causing the home mortgage rates to increase. But step back and look at the graph from an early perspective, and you will notice that the appreciation rate of house prices is growing.
Charts show from January to mid-2020, the home value appreciation rate accumulated around 3 to 4% before increasing to 18.7% in mid-2021. And while the latest bar shows a drop in rate to 10%, a yearly climb of 10% is still here.
What does this chart mean for your home equity?
While the current economic conditions won't allow you to bank upon the 20% appreciation rate you saw early this year, you can capitalize on the 10% overall increase in market value from last year. And there is nothing small about having a 10% from last year's 3 to 4% accumulation range.
The big lesson to learn here is this - avoid getting swayed by the headlines. They don't consider that you'll take the long-term picture into account. The truth is you have gained a lot of equity in your home as the home price has increased significantly from last year. Moving forward, the home price moderation will vary, but you can leverage the home equity boost to move forward with the sale.
Bottom Line
The bottom line is - trust that what you read in the news is sensationalized. Look beyond the headlines, and you will find that your home equity hasn't been damaged. And if you want to know how much your house is worth, the local real estate office near you is just a phone call away.
