Not sure what is happening with home prices as 2022 comes to an end? Most people are confused with the state of the real estate market, especially as experts continually add their conjectures.
You may have heard, for example, that home prices are decreasing. That is not really accurate though. The confusion stems from how we talk about home prices.
When prices increase, we call it appreciation. When they decrease, we call it depreciation. And then there is what we are currently seeing in many real estate markets across the country: deceleration.
Deceleration is when prices are still increasing, but they are increasing at a slower rate than they previously were.
During the Covid pandemic, home prices soared, with month after month of record home price increases. It may seem like home prices are currently decreasing because some sellers are reducing their asking prices or because listed homes appear to be listed for less than comparable homes just a few months ago. However, what is actually happening right now is that home prices are increasing at a slower rate.
In 2021, we saw home price increases of around 15% across the country. Home prices in 2022 seem like they have been on a rollercoaster. Further inspection, though, shows that the first several months of the year had increases around 20%, and now we are seeing decelerated growth. This is partly because of Fed rate increases that have led to increased mortgage rates. How the market will fare over the next few months will depend on inflation and how the Fed attempts to manage it.