Despite ample data indicating a rise in home prices across much of the country, a notable percentage of people remain concerned about the possibility of another price crash in the near future. According to a recent survey conducted by Fannie Mae, 23% of consumers hold the belief that home prices will decline over the next 12 months. This statistic reflects a significant portion of individuals grappling with the fear of a potential price decrease, and it’s acknowledged that you might be among them.
To alleviate concerns about a potential decline in home prices, experts provide insights into what is projected to happen not only in the upcoming year but also over the next five years. Their analysis aims to offer a longer-term perspective and address worries about immediate price crashes in the housing market.
Experts Project Ongoing Appreciation
Recognizing that a small number of individual expert opinions may not be sufficient to change perceptions, the reassurance is extended through the collective perspective of a larger group of experts. The intention is to provide a more comprehensive and convincing outlook on the trajectory of home prices, aiming to alleviate concerns and offer a broader context for consideration.
The Home Price Expectation Survey (HPES) from Pulsenomics is highlighted as a valuable resource, incorporating forecasts from over 100 economists, investment strategists, and housing market analysts. The results from the latest quarterly release of the survey indicate a consensus among these experts that home prices are expected to experience annual increases through the year 2027. This comprehensive survey provides a robust and extended outlook on the trajectory of home prices over a five-year period (see graph below):
The experts note that while the projected increase in home prices for 2024 may not be as substantial as in 2023, it’s essential to understand that home price appreciation is cumulative. In simpler terms, if the experts’ projections are accurate and your home’s value rises by 3.32% this year, it should experience an additional increase of 2.17% the following year. This cumulative effect contributes to a steady growth in home values over time.
The key takeaway for those concerned about potential home price declines is that, despite variations in prices across different local areas, experts project a continued upward trajectory nationwide for years to come. This projected increase is expected to align with a more normal and sustainable pace for the housing market, providing reassurance amid worries about a potential downturn.
What Does This Mean for You?
Using a hypothetical scenario, if you purchased a $400,000 home at the beginning of this year and consider the forecast from the Home Price Expectation Survey (HPES), the projection suggests a potential accumulation of more than $71,000 in household wealth over the next five years. This example aims to illustrate the potential financial benefits tied to the anticipated appreciation in home values according to expert projections.
For those anxious about a potential decline in home prices, numerous experts offer reassurance, asserting that the opposite is true. Nationally, home prices are projected to continue their upward trend not only in the coming year but for an extended period. If there are any lingering questions or concerns about the future of home prices in your local area, the suggestion is to connect with a real estate professional for personalized insights and guidance.