From the desk of Chris Lamm,
Hope everyone’s year is off to a great start! This month I wanted to address the question that I get asked a lot which is, “are home values over-inflated?” This inevitably begs to question whether the housing market is secure or headed for another downturn. Enjoy the information and if you have any questions feel free to contact me.
“The median existing-home price for all housing types in January was $240,500, up 5.8 percent from January 2017 ($227,300). January’s price increase marks the 71st straight month of year-over-year gains.” (NAR)
With seventy-one consecutive months of price increases on homes it has some concerned that home values may be overinflated.
Zillow also released this quote last week:
“If the housing bubble and bust had not happened, and home values had instead appreciated at a steady pace, the median home value would be higher than its current value.”
Here are two graphs helping to show why home prices are exactly where they should be.
The first graph shows actual median home sales prices from 2000 through 2017.
The next graph includes where prices would naturally be, had there not been a boom & bust, and it show something completely different.
The blue bars represent where prices would be had they increased at a normal appreciation rate and by adding to the subsequent year it shows where housing prices are now which is a actually a little LOWER than where they should be.
Based on historic appreciation levels, we should be very comfortable that current home values are not overinflated.
Check out my video update for more info.