Home prices are flat, according to headlines if you’ve been following real estate news recently. And that seems easy enough on the surface. Here’s the thing, though. It’s not quite that simple in reality.
Prices aren’t flat in most places.
What the Data Really Shows
Although prices have undoubtedly decreased from their sharp and unsustainable rise in 2020–2022, the extent of this change will vary by location.
This is evident if you examine data for the 50 largest metro areas from ResiClub and Zillow. There are two sides to the true story. Prices continue to rise in half of the metros. The other half? The graph below shows a slight decline in prices.
The key lesson here is that “flat” does not imply that prices are staying the same everywhere. In reality, the figures demonstrate how much price trends will change based on your location.
One of the causes of the divide? Stock. According to Harvard University’s Joint Center for Housing Studies (JCHS),
In markets around the nation, price trends are starting to diverge. While prices continue to rise in markets where for-sale inventories are still tight, they are falling in an increasing number of markets where inventories have skyrocketed.
You get a number that appears to be flat when you average those disparate trends together. However, it doesn’t tell you the whole story, and it doesn’t reflect how most markets are feeling right now. You’re worthy of better.
Just in case you’re concentrating too much on the declines, keep in mind that those are mainly areas where prices increased too quickly and excessively only a few years ago. Over the last five years, prices have increased by about 50% nationwide, and in some of the markets that are currently going through a more significant correction, they have increased even more. Therefore, even a slight decrease in some local pockets still benefits the majority of homeowners in terms of their home’s overall value. Furthermore, experts do not anticipate a nationwide decline in the near future based on the fundamentals of the current housing market.
What, then, do you really need to know?
If You’re Buying…
Understanding local events is crucial because they will affect everything from how soon you must make an offer to how much negotiating leverage you will have after you do.
- Waiting around could result in paying more later on in a market where prices are still slowly rising.
- You might be able to sweeten the deal by requesting things like repairs or closing cost assistance in a market that is easing.
The bottom line? You are in control when you are aware of your local trend.
If You’re Selling…
In order to determine how much to negotiate for and how much to charge for your home, you should be aware of local trends.
- You might not have to make many concessions to sell your house in a market where prices are still rising.
- However, it becomes much more crucial to set the right price early on and be open to negotiating if you’re in a market where prices are declining.
The homeowner’s big action item? If sellers wish to avoid making a poor pricing decision, they should consult a local agent. Properly priced homes are sure to sell.
The Real Story Is Local
The national averages provide useful context by indicating general trends. However, because events in your zip code may differ, you may occasionally need a local perspective. According to an article by Senior Economist Anthony Smith of Realtor.com:
Local market conditions have grown more fragmented even as national prices have continued to rise. As the fall season begins, it is anticipated that this regional divide will continue to have an impact on sales activity and price dynamics.
Therefore, depending on a local agent who is an expert in your market is the best course of action, whether you are buying or selling.
They will have the information and experience to tell you whether local prices are rising, staying the same, or slightly decreasing, and how that might affect your move.
Conclusion
Home prices may appear to be stagnant, according to national housing reports, but this view oversimplifies the situation. Seasonality, data averaging, and local market dynamics can conceal significant shifts in real estate values. Due to strong buyer demand and limited supply, many regions are still experiencing steady appreciation. In summary, the housing market is still strong, and both buyers and sellers must comprehend local data in order to make informed choices.
5 Frequently Asked Questions
- Why do national reports say home prices are flat?
Average price movements across all markets are reported by National. This can conceal the fact that while some regions are cooling slightly, others are appreciating. - Are home prices really stable everywhere?
No. Prices in some markets continue to rise steadily, while in others, depending on supply and demand, there may be slight drops or brief plateaus. - What factors influence home price changes locally?
Changes in home values are largely determined by local job growth, housing inventory, mortgage rates, and population trends. - How can buyers use this information?
In order to determine where value growth is more robust or where bargains might be found, buyers should look beyond national averages and consult local data and experts. - What does this mean for sellers?
To attract qualified buyers and prevent overpricing their homes, sellers should set reasonable prices based on local trends rather than national headlines.