How Home Prices Are Impacting Buyers and Sellers

Montgomery County Real Estate Podcast with Diane Cardano

What’s the latest news about home prices as we look toward the fall and winter of 2019? As you can see in the video above at 0:25, the FHFA quarterly report shows that every region of the country has seen year-over-year price appreciation. In our Mid-Atlantic region, prices have appreciated by 3.97%. Now, there have been signs of deceleration, but deceleration doesn’t equal depreciation. At 0:46, you can see that each state’s home prices have appreciated—not a single one experienced any depreciation, and the overall rate of appreciation is greater than the historical norm of 3.5% to 3.6%. In Pennsylvania, prices have appreciated by 4.9% The home price situation across the country is looking good, but keep in mind that any change in price or appreciation depends on what category your home falls in. Price range matters—lower-priced homes with the least amount of inventory and the highest demand are appreciating much quicker. As we go up in price, there are fewer buyers who can afford those types of homes, which means a greater amount of inventory and slower appreciation. At the 1:42 mark, the CoreLogic Home Price Index breaks down year-over-year price changes by price range, and you can really see this effect take place. You may have heard that mortgage debt is at an all-time high, and that’s true. People are buying more and houses are more expensive. However, on a per-capita basis, mortgage debt is still close to historic lows. At 2:06, CoreLogic shows the average annual equity gain per borrower, and the last time buyers lost equity was back in 2011, which was also the last year that prices depreciated. Since then, if you’ve owned a home, you’ve gained equity. In fact, during the first quarter of 2019, homeowners gained over $6,000. Why am I talking about home equity in relation to home appreciation? There’s a lot of talk about how the housing market will be impacted if the economy slows down, but buyers have about $6.3 billion worth of equity right now, which is a different situation than what we’ve seen in the past. The good news is that, overall, there are fewer people in a negative equity situation. “It’s a great time to buy or sell and get ahead of the competition.” Dr. Frank Nothaft, the Chief Economist of CoreLogic, is quoted as saying, “With incomes up and current mortgage rates about 0.8 percentage points below what they were one year ago, home sales should have a better sales pace in the second half of 2019 than a year earlier, leading to a quickening in price growth over the next year.” So, there are two pieces of promising news here. First, appreciation is still happening. Second, since mortgage rates are going down, sales will pick up through the fall months and into winter. Normally, that’s not the case. In short, it’s a great time to buy or sell and get ahead of the competition. If you’re curious about how to get your home show-ready, I invite you to attend my next Home Selling Sharks Seminar on October 12. I’ll teach you everything you need to know, and you’ll also receive a free copy of my book “Home Selling Sharks.” To register and find out more information, just visit www.HomeSharkSeminar.com. As always, if you have any other real estate questions, don’t hesitate to reach out to me. I’d love to speak with you.