You may have seen media outlets starting to publish articles about falling home prices. You’ll see articles about foreclosures being up 150% from last year and other topics that are designed to scare you. We’re going to get ahead of the media this time and make sure you have the knowledge so that you can ignore headlines like these.
Foreclosures ARE up 150% from last year, but let’s look at the facts.This is not alarming or indicative of impending market woes. During 2021, there were moratoriums put in place, meaning that all of the foreclosures that would have taken place during that year were delayed into 2022. Although foreclosures are higher than the last two years, they’re still a whopping 60% LOWER than 2019’s report of 493,066 homes. This number was even down from 2018’s numbers by 21% and 83% lower than the peak number of foreclosures in 2010 which reported over 2.9 million homes.
Even with the increase, we still have much fewer homes entering foreclosure proceedings. Employment rates are up, as well as the national average for wages, meaning that most people will be able to afford the payments that they qualified for. Even if homeowners have found themselves unable to afford their homes, they’re protected by the newfound equity in their homes and sell to at least break even.
From 2020-2022, the housing market saw an average of over 35% increase in home values, some areas seeing even higher numbers. With demand at an all time high because of the low interest rates and extremely limited inventory, prices increased, some even above their true value.
The price drops that we’re seeing in today’s market are attributed to the extreme increase in value. While the market is advertising that they’re “falling”, this couldn’t be farther from the truth. The decrease that we’re seeing is due to homes that were originally listed over their actual sale value as well as a seasonal decrease that happens even in normal markets.
Experts are predicting home prices to stay within +/-5% of their current values through the next year and since we are entering a more normal market, we can expect to see home prices steady in the spring. In a typical market, we see prices at their highest in the spring and their lowest in the winter.
If you’re seeing home prices fall or media saying that they are, chances are that it’s only due to the seasonality of the market and is not a reason for panic.
Authored by Nicole Hein