Home Price Deceleration Doesn’t Mean Home Price Depreciation

 

Experts in the real estate industry use a number of terms when they talk about what's happening with home prices. And some of those words sound a bit similar but mean very different things. To help clarify what's happening with home prices and where experts say they're going, here’s a look at a few terms you may hear: 

Appreciation is when home prices increase. 

Depreciation is when home prices decrease. 

Deceleration is when home prices continue to appreciate, but at a slower pace. 

Experts are forecasting ongoing appreciation, just at a decelerated pace. In other words, prices will keep climbing, just not as fast as they have been. The graph below shows home price forecasts from seven industry leaders. None are calling for prices to fall. 

Mark Fleming, Chief Economist at First American, identifies a key reason why home prices won’t depreciate or drop. “In today’s housing market, demand for homes continues to outpace supply, which is keeping the pressure on house prices, so don’t expect house prices to decline.” 

And although housing supply is starting to tick up, it’s not enough to make home prices decline because there’s still a gap between the number of homes available for sale and the volume of buyers looking to make a purchase. 

Experts forecast price deceleration, not depreciation. That means home prices will continue to rise, just at a slower pace. DM me so you can get the full picture of what’s happening with home prices in our local market and to discuss your buying and selling goals.

 

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