We get asked often, in this market, with rates going up up and up, how long are these home prices going to continue to rise? If you are like them, you maybe concerned that the market is heading for a crash like 15 years ago. We are here to reinforce, as experts have, that the market is nothing like it was during the crash. Odeta Kushi, Deputy Chief Economist at First American offered:
"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 and safer space: better credit quality, low DTI [Debt-To-Income] and tons of equity. Hence, a crash in prices is very unlikely."
In the past two years in many areas, including the Triangle we have witnessed home prices appreciate into the double-digit levels. The key here is whether a home will actually depreciate in value. According to Pulsenomics, who recently released a Home Price Expectation Survey of over a 100 economists, real estate experts, and investment and market strategists, home prices will continue appreciating over the next five years. Further, the rates below are year-over-year anticipated 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%
While this still puts 2022 as a year where prices appreciate nearly ten percent, moving beyond 2022, the
appreciation levels to normal rates. Let’s break this down for both the seller and the buyer, and generally our sellers are buying at the same time, so if this is you, pay extra attention. Our personal opinion is that appreciation in the Research Triangle Area will in fact be greater than the rates listed for 2023 - 2026 as the area continues to experience population growth from people moving into the area than are moving out. At the end of the day it boils down to economics 101 - Supply and Demand. While we don't have a crystal ball, we anticipate 5-6% appreciation annually during this timeframe.
Price Appreciation and Home Buying
When homes are in limited supply in a market, as they are in Raleigh, Durham, and Chapel Hill, and the surrounding communities, and mortgage rates and prices are increasing, buying can be very frustrating. However, as you can see from the projections above, it will still be beneficial to buy sooner rather than later. Waiting to buy means you pay more in the future, and we know that interest rates on mortgages are only going to go up from here. The key is to make today's market work for you and build home equity by buying a home and watching its value increase.
If you purchased a $360,000 home in January and used this survey forecast for an estimated measure of appreciation, you could accumulate over $96,000 in household wealth over the next five years. Other factors that increase home value and equity are the area that the home is located. As experts in Research Triangle real estate, we understand where the best places to invest are and what you should be spending.
The Future of Home Price Appreciation and What It Means for You as a Home Seller
It might be tempting to hold out and sell when homes appreciate as it looks in these projections, however, we have to caution you that fewer buyers are going to be able or willing to finance with mortgage rates going up. Since we have just seen nearly 20% increases in home values in some markets, and mortgage rates are still below 5%, we urge our sellers to take advantage of this market. We have decades of
experience in selling homes in The Triangle, we understand market fluctuations and the way the city is developing. We would love to be entrusted to sell your home. Reach out for a complimentary market analysis.
Experts say prices appreciation will continue to climb at a slower pace. The best financial decision you can make is to buy today and use the future price appreciation to build your worth. If you are ready to buy or to sell, contact us today!
Posted by Larry Tollen on
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