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With More Houses Moving into Inventory, What Does It Mean for Home Values?

Oct. 25, 2018 |
Author: Atlantic Home Loans

Reports have been consistent for several months that the housing inventory is beginning to stabilize to normal numbers. After a long, arduous march back, we are actively looking down the path of a “normal” real estate future. That said, during that revival, we have seen housing values take small jumps (and in some markets larger hops) forward to justify that “normal”. What does it mean now for anyone looking to buy or sell a home in today’s normal market?

House Values -Softening – NOT Falling

You’ll see a lot of reports out there using the term “falling” for housing values. This is a misnomer. The fact is, after the long road back to a stable housing industry, a healthy housing market’s home values will slow in its upticks. Think of it like the stock market, you don’t want huge gains in a day, slow and steady wins the race here. What we’re seeing now is the slowing down of gains in home value, and it’s a good thing.

Over the last several years as we gained stability, home values have been increasing an average of 6% a year. Home values are expected to end 2018 at a 5% increase in value, which shows the beginning of this slowdown in rates. And projections for 2019 are between 4-5%.

What does this mean for someone looking to buy or sell a home during the next year?

Say you’re selling your home. As of January 1 of this year, it was worth $250,000. By December 31st, it would be worth about $262,500.

If you don’t get to sell your home until next December, it would be worth $273,000, if it followed the lower-end 4% home value increase estimated for 2019.

Home values are NOT falling. The rate at which they are increasing is stabilizing, which means the market will behave more consistently for a longer amount of time than a volatile, fast-rise market. (Think about what happens when that stock market jumps high for too long.)

At the end of the day, this slowing in house value rate is the feather in the cap of the housing market’s normalization. The future looks bright for buyers and sellers alike.

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