“Nancy is an amazing agent!. She went “above and beyond” to help us find the perfect home. She took the time to show us many houses. She was patient while we decided. She worked with and for us every step of the way. I recommend her to anyone looking to buy here. We moved from Connecticut and she educated us on the area so we were comfortable moving some-where we had never been before.”
Duncan Brown - Murrells Inlet, SC
Nancy Aborn Wuennemann
If you are trying to decide whether or not to sell your house, recent headlines about home prices may be top of mind. And if those stories have you wondering what that means for your home’s value, here’s what you really need to know.
What is Really Happening with Home Prices?
It’s possible you’ve seen news stories mentioning a drop in home values or home price depreciation, but it’s important to remember those headlines are designed to make a big impression in just a few words. But what headlines aren’t always great at is painting the full picture in the Greater Myrtle Beach Market.
While home prices are down slightly month-over-month, it’s also true that home values are up nationally on a year-over-year basis. The graph below uses the latest data from S&P Case-Shiller to help tell the story of what’s actually happening in the housing market today:
As the graph shows, its true… home price growth has moderated in recent months (shown in green) as buyer demand has pulled back in response to higher mortgage rates. This is what the headlines are drawing attention to today.
What is important to notice is the bigger, longer-term picture. While home price growth is moderating month-over-month, the percent of appreciation year-over-year is still well above the home price change we saw during more normal years in the market.
The bars for January 2019 through mid-2020 show home price appreciation around 3-4% a year was more typical, but even the latest data for this year shows prices have still climbed by roughly 10% over last year.
What Does This Mean for Your Home’s Equity?
While you may not be able to capitalize on the 20% appreciation we saw in early 2022, in most markets your home’s value, on average, is up 10% over last year – and a 10% gain is still dramatic compared to a more normal level of appreciation (3-4%).
The big takeaway? Do not let the headlines get in the way of your plans to sell. Over the past two years alone, you have likely gained a substantial amount of equity in your home as home prices climbed. Even though home price moderation will vary by market moving forward, you can still use the boost your equity to help power your move.
As Mark Fleming, Chief Economist at First American says:
“Potential home sellers gained significant amounts of equity over the pandemic, so even as affordability-constrained buyer demand spurs price declines in some markets, potential sellers are unlikely to lose all that they have gained.”
If you have questions about home prices or how much equity you have in your current home, let’s connect.
Americans’ opinion on the value of real estate as an investment is climbing. That is according to an annual survey from GALLUP. Not only is real estate viewed as the best investment for the ninth year in a row, but more Americans selected it than ever before. The graph below shows the results of the survey since GALLUP began asking the question in 2011. As the trend lines indicate, real estate has been gaining ground as the clear favorite for almost a decade now:
How an Investment in Real Estate Can Benefit You During High Inflation
Because inflation reached its highest level in 40 years recently, it is more important than ever to understand the financial benefits of homeownership. Rising inflation means prices are increasing across the board, and that includes goods, services, housing costs, and more. When you purchase your home, you lock in your monthly housing payments, effectively shielding yourself from increases on one of your biggest budgetary items each month.
If you are a renter, you do not have that same benefit, and you are not protected from these increases, especially as rents rise. As Danielle Hale, Chief Economist at realtor.com, notes:
“Rising rents, which continue to climb at double-digit pace . . . and the prospect of locking in a monthly housing cost in a market with widespread inflation are motivating today’s first-time homebuyers.”
When Inflation Has Risen in the Past, Home Prices Have Too!
Your house is also an asset that typically increases in value over time, even during inflation. That‘s because as prices rise, the value of your home does too. Mark Cussen, Financial Writer for Investopedia, puts it like this:
“There are many advantages to investing in real estate. . . . It often acts as a good inflation hedge since there will always be a demand for homes, regardless of the economic climate, and because as inflation rises, so do property values. . . .”
Moreover, since rising home values help increase your equity, and by extension your net worth, homeownership is historically a good hedge against inflation. Buying a home is a powerful decision. It’s no wonder why so many people view it as the best long-term investment, even when inflation is high. When you buy, you help shield yourself from increases in your housing costs and you own an asset that typically gains value with time. If buying a home could be a great investment for you, let’s connect!
1232-B Farrow Parkway
Myrtle Beach, SC 29577