Are Home Values Really Overinflated

Dated: 03/01/2018

Views: 80

Image title

Are Home Values Really Overinflated?

First Time Home Buyers, For Buyers, Housing Market Updates, Pricing

Last week, the National Association of Realtors (NAR) released their most recent Existing Home Sales Report. According to the report:

“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.”

Seventy-one consecutive months of price increases may have some concerned that current home values may be overinflated.

However, at the same time, Zillow issued a press release which revealed:

“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 that help show why home prices are exactly where they should be.

The first graph shows actual median home sales prices from 2000 through 2017.

Image title

By itself, this graph could heighten concerns as it shows home values rose in the early 2000s, came tumbling down and are now headed up again. It gives the feel of a rollercoaster ride that is about to take another turn downward.

However, if we also include where prices would naturally be, had there not been a boom & bust, we see a different story.

Image title

The blue bars on this graph represent were prices would be if they had increased by the normal annual appreciation rate (3.6%). By adding 3.6% to the actual 2000 price and repeating that for each subsequent year, we can see that prices were overvalued during the boom, undervalued during the bust, and a little bit LOWER than where they should be right now.

Bottom Line

Based on historic appreciation levels, we should be very comfortable that current home values are not overinflated.



Blog author image

Charles Juarez

With my expertise in realty for both buying or selling a home in San Antonio, and surrounding areas. You have found the right resource for your real estate needs. Whether you are looking for a new hom....

Latest Blog Posts

Your CLUE Insurance Report Matters

Your CLUE Insurance Report MattersBy: Mariwyn EvansPublished: August 11, 2016Your CLUE insurance report keeps your homeowners insurance claims alive for seven years--and that could cost you on

Read More

2018 San Antonio Fiesta Schedule

www.fiesta-sa.org/wp-content/uploads/2018/03/2018-Fiesta-Schedule-of-Events.pdf    For some reason this link is not working. Please goto Fiesta-SA.org to down load this schedule.

Read More

Apr 16 2018 51568 3

Making an Offer  Written by SABORA REALTOR® can help you find your perfect home, but only you can decide how much you are willing to offer for it. The

Read More

Apr 16 2018 51568 2

Deciding What You Need & Want Written by SABOR Some suggestions to help you prepare for your search Make a list of your needs and wants. Do you need an

Read More