Fall is upon us and now that the end of the year is in sight this has many people asking what is in store for home prices in the new year. Experts have started to make their predictions and the forecasts are proving to be positive news for homeowners who may have thought the future was going to be grim.

 

In recent years home values have been appreciating quite rapidly as we all know. Expectations for next year’s home price appreciation are coming in at an average of 2.5% by forecasters including Fannie Mae, HPES, Freddie Mac, MBA, NAR and Zelman. Zelman & Associates was the only entity that projected a small depreciation of 3%. 

 

Financial expert, Dave Ramsey sums it up by saying “The root issue of what drives house prices almost always is supply and demand . . .”

 

The two primary factors that play into this is that there still is a lack of supply of housing options that we are experiencing across the country. While increasing home loan rates will weaken buying power, there is still a large pool of buyers who want to make a home purchase with few options. Inventory levels sit below a 6 month supply which is telling us that we still remain in more of a seller’s market these days. 

 

The other thing that plays a role in the forecast for demand is who is making up a large pool of buyers. That pool is millennials and they make up the second largest demographic behind baby boomers and they are in their peak buying years. 

 

Ultimately nobody has a crystal ball to tell us exactly how things will play out and what markets will experience which trends. However, when we look consult these important elements making up today’s real estate market landscape it looks like we can expect home prices to still appreciate just not as greatly as we have seen in recent years.