Home Values Rise Even as Median Prices Fall

Recent headlines have been buzzing about the median asking price of homes dropping compared to last year, and that’s sparked plenty of confusion. And as a buyer or seller, it’s easy to assume that means prices are coming down. But here’s the catch: those numbers don’t tell the full story. Nationally, home values are actually rising, even if the median price is down a bit. Let’s break down what’s really happening so you can make sense of the market without getting caught up in the fear the headlines create. Homes on the Market Right Now Are Smaller The biggest reason for the dip in median price is the size of homes being sold. The median price reflects the middle point of all the homes for sale at any given time. And that’ll be affected by the mix of homes on the market. To show you how this works, here’s a simple explanation of a median (see visual below). Let’s say you have three coins in your pocket, and you decide to line them up according to their value from low to high. If you have one nickel and two dimes, the median (the middle one) is 10 cents. If you have two nickels and one dime, the median is now five cents. In both cases, a nickel is still worth five cents and a dime is still worth 10 cents. The value of each coin didn’t change. The same is true for housing. Right now, there’s a greater number of smaller, less expensive homes on the market, and that’s bringing the overall median price down. But that doesn’t mean home values are declining. As Danielle Hale, Chief Economist at Realtor.com, explains: “The share of inventory of smaller and more affordable homes has grown, which helps hold down the median price even as per-square-foot prices grow further.” And here’s the data to prove it.  Price Per Square Foot Is Still Rising One of the best ways to measure home values is by looking at the price per square foot. That’s because it shows how much you’re paying for the space inside the home. The median asking price doesn’t take into account the size of different homes, so it may not always reflect the true value. And the latest national price per square foot data shows home values are still increasing, even though the median asking price has dropped (see graph below). As Ralph McLaughlin, Senior Economist at Realtor.com, explains: “When a change in the mix of inventory toward smaller homes is accounted for, the typical home listed this year has increased in asking price compared with last year.” This means that while smaller homes are affecting the median price, the average home’s value is still rising. According to the Federal Housing Finance Agency (FHFA): “Nationally, the U.S. housing market has experienced positive annual appreciation each quarter since the start of 2012.” So, while headlines may make it sound like prices are crashing, you don’t have to worry. With a closer look and more reliable data, you can see that prices are still climbing nationally. But it’s important to remember that home prices can vary by region. While national trends provide a big-picture view, local markets may be experiencing different conditions. A trusted agent is the best resource to explain what’s happening in your area. Bottom Line The decrease in median price is not the same as a decrease in home values. The median asking price is down mostly due to the mix of smaller, less expensive homes on the market. The important thing to focus on is the price per square foot, which is a better indicator of overall market value—and those prices are still going up. If you have questions about what home prices are doing in your area, please contact us to discuss the current market situation in your area.

This Is the Sweet Spot Homebuyers Have Been Waiting For

After months of sitting on the sidelines, many homebuyers who were priced out by high mortgage rates and affordability challenges finally have an opportunity to make their move. With rates trending down, today’s market is a sweet spot for buyers—and it’s one that may not last long. So, if you’ve put your own move on the back burner, here’s why maybe you shouldn’t delay your plans any longer. As you weigh your options and decide if you should buy now or wait, ask yourself this: What do you think everyone else is going to do? The truth is, if mortgage rates continue to ease, as experts project, more buyers will jump back into the market. A survey from Bankrate shows over half of homeowners would be motivated to buy this year if rates drop below 6% (see graph below): With rates already in the low 6% range, we’re not terribly far off from hitting that threshold. The bottom line is, that when they drop into the 5s, the number of buyers in the market is going to go up – and that means more competition for you. That increased demand will likely push home prices up, which could potentially take away from some of the benefits you’d gain from a slightly lower interest rate. As Nadia Evangelou, Senior Economist and Director of Real Estate Research at the National Association of Realtors (NAR), explains: “The downside of increased demand is that it puts upward pressure on home prices as multiple buyers compete for a limited number of homes. In markets with ongoing housing shortages, this price increase can offset some of the affordability gains from lower mortgage rates.” So, while waiting to buy may seem like a smart move, it could backfire if rising prices outpace your savings from slightly lower rates. What This Means for You Right now, you’ve got the chance to get ahead of all of that. Today’s market is a buyer sweet spot. Why? Because a lot of other buyers are waiting – which means not as many people are actively looking for homes. That means less competition for you. At the same time, affordability has already improved quite a bit. Recent easing in mortgage rates has made homeownership more accessible. As Mike Simonsen, Founder of Altos Research, says: “Mortgage payments on the typical-price home are 7% lower than last year and are 13% lower than the peak in May 2024.” And while the supply of homes for sale is still low, it’s also higher than it’s been in years. According to Ralph McLaughlin, Senior Economist at Realtor.com: “The number of homes actively for sale continues to be elevated compared with last year, growing by 35.8%, a 10th straight month of growth, and now sits at the highest since May 2020.” This means you now have more options to choose from than you’ve had in quite a while. With fewer buyers in the market, improving affordability, and more homes to choose from, you have the chance to find the right one before the competition heats up. Why Waiting Could Cost You If you’re waiting for the perfect time to buy, it’s important to understand that timing the market is nearly impossible. The longer you wait, the higher the risk that market conditions will shift—and not necessarily in your favor. As Greg McBride, Chief Financial Analyst at Bankrate, says: “It’s one of those things where you should be careful what you wish for. A further drop in mortgage rates could bring a surge of demand that makes it tougher to actually buy a house.” Bottom Line Don’t wait until you have to deal with more competition and higher prices – you already have the chance to buy a home while we’re in the sweet spot today. Let's sit down together to discuss your next move to make sure you’re taking advantage of it.

Why Buying Now May Be Worth It in the Long Run

Should you buy a home now or should you wait? That’s a question a lot of people have these days. And while what’s right for you is going to depend on a lot of different factors, here’s something you’ll want to consider as you make your decision. As soon as you buy, you’ll start gaining equity. And you’d be surprised how quickly that can add up – even with more moderate home price appreciation. Each quarter, Fannie Mae releases the Home Price Expectations Survey. It asks over one hundred economists, real estate experts, and investment and market strategists what they forecast for home prices over the next five years. In the latest release, experts project prices will continue to rise nationally through at least 2028 (see the graph below): While home prices are going to vary from one local area to the next, this shows they’re expected to keep going up nationally. The size of the increase varies from year-to-year, but the important takeaway is that prices are forecast to rise every single year – just at a moderate pace. And while rising home prices may not sound great right now, once you own a home, that growth will be a big bonus for you. Here’s a look at what you stand to gain equity-wise once you buy. The graph below uses a typical home’s value and those HPES projections to show how much equity is at stake: If you bought a $450,000 home at the beginning of this year, based on that starting value and the expert forecasts from the HPES, you could gain more than $90,000 in household wealth over the next five years. That’s significant. So, if you’re ready and able to buy, and growing your wealth is important to you, you’ve got an opportunity in front of you. And now that mortgage rates have fallen, it may be time to consider making a move. To talk more about your options and what makes sense, lean on a pro. They’ll be able to tell you what home prices are doing in your area and what that means for your move (and your future equity). The Mortgage Reports says: “Given the intricacies of the current market, it’s more important than ever to stay informed and up to date about housing market conditions. Whether you’re looking to buy or sell in the remaining months of 2024, having a professional guide you through the process can make all the difference.”  Bottom Line The decision to buy now or wait is a very personal one, but it’s valuable to have an expert’s perspective. They won’t push you, but they will explain things you may not have considered, like the equity that’s at stake.

The Number One Mistake Sellers Are Making: Overpricing Their House

In today’s housing market, many sellers are making a critical mistake: overpricing their houses. This common error can lead to a home sitting on the market for a long time without any offers. And when that happens, the homeowner may have to drop their asking price to try to re-ignite buyer interest. Data from Realtor.com shows the number of homeowners realizing this mistake and doing a price reduction is climbing (see graph below): If you’re thinking about making a move yourself, here’s what you need to know. The best way to avoid making a costly mistake is to work with a trusted real estate agent to find the right price. Here’s a look at what’s at stake if you don’t. Not Paying Attention To Current Market Conditions Understanding current market conditions is key to accurate pricing. You don’t want to set your asking price based on what happened during the pandemic. The market has moderated a lot since then, so it’s far better to align your price with today’s reality. Real estate agents stay updated on market trends and how they impact the pricing strategy for your house. Pricing It Based on What You Want To Make (Not What It’s Worth) Another misstep is pricing it based on what you want to make on the sale, and not necessarily current market value. You may see other homes in your neighborhood selling for top dollar and assume yours can do the same. But you may not be considering differences in size, condition, and features. For example, maybe that other house is waterfront or has a finished basement. To sum it up, Bankrate explains: “How do you find that sweet spot of pricing for profit but not overpricing? The expertise of your agent can be truly valuable here. A knowledgeable agent will understand fair market value in your area, how much your house is worth and how much you might reasonably expect to get for it in the current market.” An agent will do a comparative market analysis (CMA) to make sure your house is compared with truly similar properties to get an accurate look at how it should be priced. Pricing High to Leave Room for Negotiation Another common, yet misguided strategy is to price your house high on purpose, so you have more room to negotiate down during the sale. But this can backfire. A price that seems too high often deters potential buyers from even considering the home. So rather than leaving room for negotiation, what you’ll actually be doing is turning buyers away. U.S. News Real Estate explains: “You want to sell your house for top dollar, but be realistic about the value of the property and how buyers will see it. If you’ve overpriced your home, chances are you’ll eventually need to lower the number, but the peak period of activity that a new listing experiences is already gone.” An agent can help you set a fair price that attracts buyers and encourages more competitive offers. Bottom Line Overpricing your home can have serious consequences. A knowledgeable real estate agent brings an objective perspective, in-depth market knowledge, and a strategic approach to pricing. Connect with us to avoid making a pricing mistake that’ll cost you.