Understanding the Surge in Home Prices: Insights from AgentOwned Realty in Charleston SC

The ebb and flow of home prices can stir a rollercoaster of emotions for those dreaming of buying a new place or upgrading their current home. Amidst concerns about potential drops in home prices, the data tells a different story. At AgentOwned Realty, your local real estate expert in Charleston SC, we decode the dynamics behind the consistent rise in home prices.

Analyzing the Trends

National data from various sources reveals a consistent upward trend in home prices throughout the year. The initial half of 2022 witnessed significant and unsustainable increases (green bars on the left side of the graph). Subsequently, the second half experienced a correction, with prices dipping slightly (shown in red). However, these declines were shallow and short-lived, creating fear and uncertainty in the media headlines.

In 2023, home prices are once again on the rise, but this time at a more normal pace (green bars on the right side of the graph). After the highs and corrections of 2022, the return to typical price appreciation is positive news for the housing market.

Orphe Divounguy, Senior Economist at Zillow, describes the recent changes in home prices over the past 12 months:

“The U.S. housing market has surged over the past year after a temporary hiccup from July 2022-January 2023. . . . That downturn has proven to be short lived as housing has rebounded impressively so far in 2023. . .”

Factors Driving the Increase

The scarcity of homes for sale remains a driving force behind the resurgence in home prices. While higher mortgage rates moderate buyer demand, they also reduce the supply of available homes due to the mortgage rate lock-in effect. When rates rise, homeowners are hesitant to sell and lose their current low mortgage rate, influencing both buyers and sellers in the market.

Freddie Mac highlights this dual impact:

“While rising interest rates have reduced affordability—and therefore demand—they have also reduced supply through the mortgage rate lock-in effect. Overall, it appears the reduction in supply has outweighed the decrease in demand, thus house prices have started to increase . . .”

Impact on Buyers and Sellers

• Buyers: If concerns about the value of a home dropping have kept you from making a purchase, the knowledge that home prices are on the rise should offer reassurance. Buying a home provides an opportunity to own an asset that traditionally appreciates over time.

• Sellers: For those delaying the sale of their homes due to concerns about fluctuating prices, now could be an opportune moment. Recent data indicates that home prices are favoring sellers once again.

Bottom Line: If the fear of declining home prices has hindered your plans to move, the current data demonstrates an overall increase in home prices. Connect with AgentOwned Realty to understand how these trends specifically impact our local area in Charleston SC, one of the best places to live in the South.