Amidst the fluctuating reports about home prices, it’s easy to get the wrong impression that they’re plummeting. However, the reality is more layered than what the headlines suggest.
Analyzing national figures for 2023 reveals an overall positive trend in home prices. Despite minor dips in certain months, the general movement was upward, contradicting the notion of a widespread decline.
The overarching story is that prices went up last year, not down. Let’s dive into the data to set the record straight.
2023: A Year of Normalized Home Price Growth
The previous year signified a shift towards more regular patterns of home price appreciation. Here’s a closer look at the inherent seasonality within the housing market:
Typically, the housing market experiences its busiest phase in spring, leading to a spike in demand and subsequently, in prices. This pattern gradually tapers off towards the year’s end, mirroring the seasonal demand fluctuations.
Historical data from Case-Shiller, spanning 1973 to 2022, illustrates this seasonal trend in home prices:(not adjusted, so you can see the seasonality):
This graph demonstrates how home prices in 2023 aligned with the long-standing seasonal trend, especially noticeable in the latter part of the year. The media, however, mainly spotlighted the brief declines, outlined in red in the graph, without providing a broader context. It’s essential to recognize that minor dips during fall and winter align with the historical norm, often being marginal and not indicative of a broader trend.
Now, let’s layer the data that’s come out for 2023 so far (shown in green) on top of that long-term trend (still shown in blue). That way, it’s easy to see how 2023 compares.
As the graph shows, moving through the year 2023, the level of appreciation fell more in line with the long-term trend for what usually happens in the housing market. You can see that by how close the green bars come to matching the blue bars in the later part of the year.
But the headlines only really focused on the two bars outlined in red. Here’s the context you may not have gotten that can really put those two bars into perspective. The long-term trend shows it’s normal for home prices to moderate in the fall and winter. That’s typical seasonality.
And since the 49-year average is so close to zero during those months (0.10%), that means it’s not unusual for home prices to drop ever so slightly during those times. But those are just blips on the radar. If you look at the year as a whole, home prices still rose overall.
What You Really Need To Know
HMedia reports tend to highlight short-term decreases, overlooking the annual trajectory. Last year marked a return to the expected seasonal behavior in the housing market, a welcome change after the unusual spikes during the pandemic.
Concerns about a potential drop in Raleigh home prices are largely unfounded. With mortgage rates decreasing and buyer demand rising against a backdrop of limited housing supply, prices are likely to continue their upward trend.
Bottom Line
Don’t be swayed by sensational home price headlines. The overarching data from 2023 shows a positive trajectory in home prices. For a deeper understanding of the market dynamics and how they affect Triangle area home prices, contact Linda Craft Team Realtors for a detailed discussion.