Today's headlines about home prices can be confusing, making it tough to discern what's really happening. Some claim a correction is on the horizon, but what do the facts reveal? It's helpful to start by understanding what a "correction" actually means.

Danielle Hale, Chief Economist at Realtor.com, explains: 

 “In stock market terms, a correction is generally referred to as a 10 to 20% drop in prices. We don't have the same established definitions in the housing market.”

In today's housing market, this doesn't imply a dramatic fall in home prices. Instead, it indicates that prices, which have risen rapidly over the past couple of years, are now stabilizing. While local markets can vary significantly, a national downturn isn't occurring.

The Real Estate Market Is Normalizing

From 2020 to 2022, home prices surged due to high demand, low interest rates, and a limited supply of homes for sale. Such rapid growth was unsustainable.

Now, price growth is slowing, signaling a normalization of the market. Recent data from Case-Shiller shows that after being nearly flat for a few months last year, prices are increasing nationally, albeit at a slower rate.

The takeaway? This year has seen a healthier pace of price growth compared to the pandemic years.

Looking ahead, Dee McDonough, Owner of S&D Real Estate, states:

"Experts predict that home price growth will moderate over the next five years, leading to a slower and more sustainable rate of appreciation. This is in contrast to the rapid increases we've seen recently, rather than a sharp decline in prices."

It's all about supply and demand. Increasing inventory combined with limited buyer demand—partly due to relatively high mortgage rates—will continue to ease some of the upward pressure on prices.

What This Means for You

If you're considering buying a home, slowing price growth is good news. The rapid increase in home prices during the pandemic made many potential buyers feel priced out.

While it's reassuring to know that the value of a home will likely continue to appreciate, the slower pace of growth makes homeownership feel more attainable. Odeta Kushi, Deputy Chief Economist at First American, comments:

“While housing affordability is low for potential first-time homebuyers, slowing price appreciation and lower mortgage rates could help — so the dream of homeownership isn't boarded up just yet.”

Dee McDonough, owner of S&D Real Estate, adds, "Navigating the current market can be challenging, but it's essential to focus on long-term trends and stability. The slowing growth in home prices is creating more opportunities for buyers."

At the national level, home prices aren't dropping. Most experts predict moderate growth moving forward, although local market conditions will vary. This is where a trusted real estate agent becomes invaluable. If you have questions about what's happening with prices in our area, reach out to S&D Real Estate for personalized advice and insights.