Going into 2023, there was much talk about a possible recession that would cause the housing market to crash. Some in the media were even forecasting that home prices would drop by as much as 10-20%, which might have made you feel a bit unsure about buying a home.
But here’s what happened: home prices increased more than usual. Brian D. Luke, Head of Commodities at S&P Dow Jones Indices, explains:
“Looking back at the year, 2023 appears to have exceeded average annual home price gains over the past 35 years.”
To put last year’s growth into context, the graph below uses data from Freddie Mac on how home prices have changed yearly since 1980. The dotted line shows the long-term average for appreciation:
The big takeaway? Home prices almost always go up.
As an article from Forbes says:
“. . . the U.S. real estate market has a long and reliable history of increasing in value over time.”
In fact, since 1980, home prices have dropped only during the housing market crash (shown in red in the graph above). Fortunately, the market today isn’t like it was in 2008. For starters, there aren’t enough available homes to meet buyer demand. On top of that, homeowners have a tremendous amount of equity, so they’re on much firmer footing than they were back then. That means there won’t be a wave of foreclosures that causes prices to fall.
Home values went up every year except those four in red, so owning a home can be one of the smartest moves you can make. As a homeowner, you own something that becomes more valuable over time. And as your home’s value appreciates, your net worth grows.
So, if you’re financially stable and prepared for the costs and expenses of homeownership, buying a home might make a lot of sense.
Key Takeaway
Home prices almost always go up over time. That makes buying a home a smart move if you’re ready and able. Let’s connect to talk about your goals and what’s available in our area.
Other educational articles about the market and your home search are under Karen’s Blog. Additionally, explore the search bar for other topics of interest.
