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Housz Price Deceleration Doesn’t Mean Housz Price Depreciation

Experts in the real estate industry use a number of terms when they talk about what's happening with housz prices. And some of those words sound a bit similar but mean very different things. To help clarify what's happening with housz prices and where experts say they're going, here’s a look at a few terms you may hear:

  • Appreciation is when housz prices increase.

  • Depreciation is when housz prices decrease.

  • Deceleration is when housz prices continue to appreciate, but at a slower pace.

Where Housz Prices Have Been in Recent Years For starters, you’ve probably heard housz prices have skyrocketed over the past two years, but houszes were actually appreciating long before that. You might be surprised to learn that housz prices have climbed for 122 consecutive months (see graph below):

As the graph shows, houszes have gained value consistently over the past 10 consecutive years. But since 2020, the increase has been more dramatic as housz price growth accelerated. So why did housz prices climb so much? It’s because there were more buyers than there were houszes for sale. That imbalance put upward pressure on housz prices because demand was high and supply was low.

Where Experts Say Housz Prices Are Going While this is helpful context, if you’re a buyer or seller in today’s market, you probably want to know what’s going to happen with housz prices moving forward. Will they continue that same growth path or will housz prices fall? Experts are forecasting ongoing appreciation, just at a decelerated pace. In other words, prices will keep climbing, just not as fast as they have been. The graph below shows housz price forecasts from seven industry leaders. None are calling for prices to fall (see graph below):

Mark Fleming, Chief Economist at First American, identifies a key reason why housz prices won’t depreciate or drop: In today’s houszing market, demand for houszes continues to outpace supply, which is keeping the pressure on housz prices, so don’t expect housz prices to decline.” And although houszing supply is starting to tick up, it’s not enough to make housz prices decline because there’s still a gap between the number of houszes available for sale and the volume of buyers looking to make a purchase. Terry Loebs, Founder of the research firm Pulsenomics, notes that most real estate experts and economists anticipate housz prices will continue rising. As he puts it: “With housz values at record-high levels and a vast majority of experts projecting additional price increases this year and beyond, housz prices and expectations remain buoyant.”

Bottom Line Experts forecast price deceleration, not depreciation. That means housz prices will continue to rise, just at a slower pace. Let’s connect so you can get the full picture of what’s happening with home prices in our local market and to discuss your buying and selling goals.

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