Beyond the Hype: How to Interpret Home Price Headlines with Caution

If you’re thinking of buying or selling a home, one of the biggest questions you have right now is probably: what’s happening with home prices? And it’s no surprise you don’t have the clarity you need on that topic. Part of the issue is how headlines are talking about prices.

They’re basing their negative news by comparing current stats to the last few years. But you can’t compare this year to the ‘unicorn’ years (when home prices reached record highs that were unsustainable). And as prices begin to normalize now, they’re talking about it like it’s a bad thing and making people fear what’s next. But the worst home price declines are already behind us. What we’re starting to see now is the return to more normal home price appreciation.

To help make home price trends easier to understand, let’s focus on what’s typical for the market and omit the last few years since they were anomalies. 

Let’s start by talking about seasonality in real estate. In the housing market, there are predictable ebbs and flows that happen each year. Spring is the peak homebuying season when the market is most active. That activity is typically still strong in the summer but begins to wane as the cooler months approach. Home prices follow along with seasonality because prices appreciate most when something is in high demand.

That’s why, before the abnormal years we just experienced, there was a reliable long-term home price trend. The graph below uses data from Case-Shiller to show typical monthly home price movement from 1973 through 2021 (not adjusted, so you can see the seasonality):

As the data from the last 48 years shows, at the beginning of the year, home prices grow, but not as much as they do entering the spring and summer markets. That’s because the market is less active in January and February since fewer people move in the cooler months. As the market transitions into the peak homebuying season in the spring, activity ramps up, and home prices go up a lot more in response. Then, as fall and winter approach, activity eases again. Price growth slows, but still typically appreciates.

Why This Is So Important to Understand

In the coming months, as the housing market moves further into a more predictable seasonal rhythm, you’re going to see even more headlines that either get what’s happening with home prices wrong or, at the very least, are misleading. Those headlines might use a number of price terms, like:

  • Appreciation: when prices increase.
  • Deceleration of appreciation: when prices continue to appreciate, but at a slower or more moderate pace.
  • Depreciation: when prices decrease.

They’re going to mistake the slowing home price growth (deceleration of appreciation) that’s typical of market seasonality in the fall and winter and think prices are falling (depreciation). Don’t let those headlines confuse you or spark fear. Instead, remember it’s normal to see a deceleration of appreciation, slowing home price growth, as the months go by.

Bottom Line

If you have questions about what’s happening with home prices in our local area, let’s connect.

287 Properties
Page 1 of 24
$425,000
Neighborhood: Rotonda Heights
3
Beds
2
Baths
1,409
Sq.Ft.
2002
Year Built
1
Day on Site
D6136982
MLS
$575,000
Neighborhood: Rotonda West Pinehurst
3
Beds
2
Baths
1,689
Sq.Ft.
2025
Year Built
2
Days on Site
C7494037
MLS
$379,900
Neighborhood: Rotonda West Pebble Beach
3
Beds
2
Baths
1,732
Sq.Ft.
1989
Year Built
2
Days on Site
D6136949
MLS
$675,000
Neighborhood: Rotonda West Broadmoor
4
Beds
3
Baths
2,420
Sq.Ft.
2006
Year Built
2
Days on Site
N6129431
MLS
$372,000
Neighborhood: Rotonda West Oakland Hills
3
Beds
2
Baths
1,200
Sq.Ft.
1981
Year Built
3
Days on Site
A4613924
MLS
$239,000
Neighborhood: Rotonda West Oakland Hills
2
Beds
2
Baths
1,292
Sq.Ft.
1979
Year Built
3
Days on Site
A4612829
MLS
$332,597
Neighborhood: Rotonda Lakes
3
Beds
2
Baths
1,551
Sq.Ft.
2024
Year Built
3
Days on Site
T3532527
MLS
Open 6/15
235 Bunker Rd Rotonda West,  FL 33947
$325,000
Neighborhood: Rotonda West Pebble Beach
2
Beds
2
Baths
1,596
Sq.Ft.
1989
Year Built
3
Days on Site
D6136852
MLS
$510,000
Neighborhood: Pebble Beach
3
Beds
2
Baths
1,850
Sq.Ft.
2003
Year Built
4
Days on Site
D6136862
MLS
$449,900
Neighborhood: Rotonda Lakes
3
Beds
2F11/2
Baths
1,633
Sq.Ft.
2007
Year Built
5
Days on Site
D6136907
MLS
$640,000
Neighborhood: Rotonda Pine Valley
3
Beds
2
Baths
2,171
Sq.Ft.
2004
Year Built
7
Days on Site
A4613336
MLS
$299,999
Neighborhood: Rotonda West Oakland Hills
2
Beds
2
Baths
1,459
Sq.Ft.
1980
Year Built
9
Days on Site
A4613318
MLS

Post a Comment