Huntsville: The Future of Home Price Appreciation and What It Means for You

Many consumers, around the USA including the ones in our local real estate market in Huntsville Alabama metro area,  are wondering what will happen with home values over the next few years. Some are concerned that the recent run-up in home prices will lead to a situation similar to the housing crash 15 years ago.

However, the relief you may feel is that experts say the market is totally different today from the days of the market crash. For example, Odeta Kushi, Deputy Chief Economist at First American, tweeted just a few  weeks ago on this issue:

“. . . We do need price appreciation to slow today (it’s not sustainable over the long run) but high price growth today is supported by fundamentals- short supply, lower rates & demographic demand. And we are in a much different & safer space: better credit quality, low DTI [Debt-To-Income] & tons of equity. Hence, a crash in prices is very unlikely.”

Price appreciation will slow from the double-digit levels the market has seen over the last two years. However, experts believe home values will not depreciate (where a home would lose value).  We have seen changes in the North Alabama real estate market, a little bit more of inventory in some areas, some houses have had price changes, and others are keeping up with the national trend of multiple offers and bidding wars.

To this point, Pulsenomics just released the latest Home Price Expectation Survey – a survey of a national panel of over 100 economists, real estate experts, and investment and market strategists. It forecasts home prices will continue appreciating over the next five years. Below are the expected year-over-year rates of home price appreciation based on the average of all 100+ projections:

• 2022: 9%
• 2023: 4.74%
• 2024: 3.67%
• 2025: 3.41%
• 2026: 3.57%

Those responding to the survey believe home price appreciation will still be relatively high this year (though half of what it was last year), and then return to more normal levels over the next four years. If you are on the fence deciding to sell your real estate property or just wait, you may consider a few factors that may affect your selling power, clearly this is another reason to sit and connect with your trusted Real Estate Professional and go over what could benefit you in today’s real estate market.

What Does This Mean for You as a Buyer?

With a limited supply of homes available for sale and both prices and mortgage rates increasing, it can be a challenging market to navigate as a buyer. But buying a home sooner rather than later does have its benefits. If you wait to buy, you’ll pay more in the future. I can definitely walk you through what are the differences in price, and what interest rates translate into the home prices and your budget today. However, if you buy now, you’ll actually be in the position to make future price increases work for you. Once you buy, those rising home prices will help you build your home’s value, and by extension, your own household wealth through home equity.

As an example, let’s assume you purchased a $360,000 home in January of this year (the median price according to the National Association of Realtors rounded up to the nearest $10K). If you factor in the forecast for appreciation from the Home Price Expectation Survey, you could accumulate over $96,000 in household wealth over the next five years (see graph below):

Let’s Conclude With This: 

Friends, if you’re trying to decide whether to buy now or wait, the key is knowing what’s expected to happen with home prices. Experts say prices will continue to climb in the years ahead, just at a slower pace. So, if you’re ready to buy, doing so now may be your best bet for your wallet. It’ll also give you the chance to use the future home price appreciation to build your own net worth through rising equity. If you want to get started, let’s connect today, we are ready to assist you and answer all of your real estate questions.