Will Home Prices Drop in 2024? What Experts Are Saying

Today’s headlines about home prices can be super confusing, making it tough to figure out what's really going on. Some folks claim home prices are heading for a correction, but what do the actual facts say? Let's break it down by first understanding what a correction really means.

Danielle Hale, Chief Economist at Realtor.com, explains it like this:

“In stock market terms, a correction is generally referred to as a 10 to 20% drop in prices... We don't have the same established definitions in the housing market.”

So, in the housing market, a correction doesn't mean prices are going to nosedive. It simply means prices, which have been rising like crazy over the past couple of years, are starting to chill out. They’re growing more slowly. Prices can vary a lot depending on where you are, but on a national level, a huge drop isn’t happening.

The Real Estate Market Is Normalizing

From 2020 to 2022, home prices went through the roof. This was because of high demand, low interest rates, and a shortage of homes for sale. But that kind of wild growth couldn't last forever.

Now, price growth has started to slow, signaling the market is beginning to normalize. The latest data from Case-Shiller shows that after being flat for a bit last year, prices are rising again nationally – just not as quickly (see graph below).

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The big takeaway? So far this year, price growth has been much healthier compared to the pandemic frenzy.

You might be wondering what's next for prices. Marco Santarelli, Founder of Norada Real Estate Investments, gives us a hint:

“Expert forecasts lean towards a moderation in home price growth over the next five years. This translates to a slower and more sustainable pace of appreciation compared to the breakneck speed witnessed in recent years, rather than a freefall in prices.”

It's all about supply and demand. With more homes available and fewer buyers due to high mortgage rates, the pressure on prices is easing.

What This Means for You

If you're thinking about buying a home, slower price growth is great news. The pandemic's skyrocketing prices left many potential buyers feeling left out.

While it's still good to know that the value of the home you buy will likely keep increasing, slower price gains make things more manageable. Odeta Kushi, Deputy Chief Economist at First American, reassures us:

“While housing affordability is low for potential first-time home buyers, slowing price appreciation and lower mortgage rates could help — so the dream of homeownership isn't boarded up just yet.”

Bottom Line

Nationally, home prices aren't dropping. Most experts predict they’ll keep growing moderately moving forward. But remember, prices vary a lot by local market. That’s where we come in! If you have questions about what’s happening with prices in our area, reach out to us at Mayer Realty Group. We're here to help you navigate the market with confidence.