Many people have questions about home prices right now. How
much have prices risen over the past 12 months? What’s happening with home
values right now? What’s projected for next year? Here’s a look at the answers
to all three of these questions.
How much have home values appreciated over the last 12
According to the latest Home Price Index from CoreLogic,
home values have increased by 18.1% compared to this time last year.
Additionally, prices have gone up at an accelerated pace for each of the last
eight months (see graph below):
The increase in the rate of appreciation that’s shown by
CoreLogic coincides with data from the other two main home price indices: the
FHFA Home Price Index and the S&P Case Shiller Index.
The last year has shown tremendous home price appreciation,
which is resulting in a major gain in wealth for homeowners through rising
What’s happening with home prices right now?
All three indices mentioned above also show that while
appreciation is in the high double digits right now, that price acceleration is
beginning to level off (see graph below):
Year-over-year appreciation is still close to 20%, but it’s
clearly plateauing at that rate. Many experts believe it will drop below 15% by
the end of the year.
Keep in mind, that doesn’t mean home values will depreciate.
It means the rate of appreciation will slow, yet stay well above the 25-year
average of 5.1%.
What about next year?
The recent surge in prices is the result of heavy buyer
demand and a shortage of homes available for sale. Most experts believe that as
more housing inventory comes to market (both new construction and existing
homes), the supply and demand for housing will come more into balance. That balance
will bring a lower rate of appreciation in 2022. Here’s a look at home price
forecasts from six major entities, and they all project future appreciation:
While the projected rate of appreciation varies among the
experts, due to things like supply chain challenges, virus variants, and more,
it’s clear that home values will continue to appreciate next year.
There have been historic levels of home price appreciation
over the last year. That pace will slow as we finish 2021 and enter into 2022.
Prices will still rise in value, just at a much more moderate pace, which is
good news for the housing market.
Source: Real Estate with Keeping Current Matters