Based on what you've been hearing in the news about home prices dropping, you might be feeling a bit concerned. However, it's important to keep in mind that those headlines may not be telling the whole story.

Did you check out the stats for last year? Home prices across the country mostly went up in 2023, which is pretty good news. Of course, it can differ from place to place, and we did see a few months where prices dipped a bit overall, but that wasn't the norm.

Prices actually increased last year instead of going down. Let's take a closer look at the data to make sure we have all the facts straight.

2023 Was the Return to More Normal Home Price Growth

Sure thing! Last year actually saw home prices appreciate in a more typical way than in previous years. To show you, let me walk you through the usual trends in the residential real estate market.

In the world of real estate, there are these patterns that happen every year - we call it seasonality. Picture this: Spring is when things are hopping with lots of folks buying homes. Summer keeps the momentum going, but by the year's end, things start to slow down. And guess what? Home prices tend to move in sync with these seasons, peaking when demand is high.

The chart here uses info from Case-Shiller to illustrate how this trend unfolded in housing prices from 1973 to 2022 (without adjustments, so you can observe the seasonal changes).

So, get this: over the past almost 50 years, home prices have been totally in sync with the typical ups and downs of the market throughout the year. At the start of the year, home prices tend to go up more slowly. Why? Well, there's less action in the market since fewer folks tend to move during January and February. But once we hit spring, which is the prime time for buying homes, things pick up speed. That's when home prices also start climbing. As we head into fall and winter, the market slows down again, and prices continue to rise, but not as quickly as before.

Let's overlay the data we have for 2023 so far (highlighted in green) on top of the long-term trend (which is in blue). This will help us easily compare how 2023 is performing in relation to the trend.

So, looking at the graph, as we went through 2023, the appreciation rate started to align more with the typical trend we see in the housing market over the long term. You can see this by how closely the green bars match the blue bars towards the end of the year.

The news mostly honed in on those two bars highlighted in red, right? Well, let me fill you in on some extra info that could give you a better grasp of why those bars are important. Looking at the bigger picture, it's actually quite common for home prices to level off during the autumn and winter months. It's just the usual seasonal trend kicking in.

It's interesting to see that the 49-year average is pretty much around zero in those months (0.10%), which explains why home prices might dip slightly during that period. However, these drops are just minor blips. When you consider the entire year, home prices actually increased overall.

What You Really Need To Know

Headlines tend to highlight the minor monthly decreases instead of looking at the larger annual trend. It might give the wrong impression since it's only showing a small part of the overall situation.

Last year, we noticed that the housing market started to follow more seasonal patterns again – which is actually a positive change. This shift happened because home prices had shot up dramatically during the surreal times of the pandemic.

Don't stress about home prices dropping! Here's the deal: experts predict that prices will keep going up this year. Why? Well, more buyers are jumping back into the market because mortgage rates are lower than last year. Plus, as more folks are looking to move and there aren't many homes up for sale, prices will likely stay on the rise.

Bottom Line

Hey there! Just a heads up - those home price headlines can be a bit tricky. The facts say that overall, home prices went up in 2023. If you're feeling lost with all the news or curious about how home prices are doing in our neighborhood, feel free to reach out. Let's chat!