It’s one of the biggest hold ups some buyers have right now: “What if I buy, and home prices go down?”
With everything in the news, that concern makes some sense. No one wants to make a big financial decision at the wrong time. But here’s what’s important to know. You don’t want to get hung up on the few places seeing slight declines right now.
When you zoom out and look at the full picture, home prices usually rise over time.
What the Data Really Shows
Take a look at the visual below. It uses data from Case-Shiller and Bilello to show how home prices have changed year by year going all the way back to the 1950s.
Here’s the key takeaway.
Outside of the housing crash, home prices have either held steady or increased in just about every year for decades (see visual below):
That’s a remarkably consistent track record. And it shows something a lot of headlines miss.
While short-term shifts can happen, it’s the long-term gains that really matter.
Why Prices Tend To Rise Over Time
There are a few core reasons prices usually go up each year:
- There are always people who need to move. People need a place to live, and that demand will never fully go away. It may ebb and flow, but someone will always have to move as big changes happen in their life. So, homes stay in demand.
- There still aren’t enough homes for sale. While the number of homes for sale has grown, nationally there’s still an undersupply based on how many people want a home. That keeps upward pressure on prices.
- Inflation has an impact. Over time, the cost of goods (including homes) naturally increases. That pushes home values higher.
What That Means for You as a Buyer
It’s easy to get caught up in what might happen with home prices next month or next year, especially if you’re a first-time buyer and you’re feeling a little anxious about making such a big financial commitment. But the big picture is clear. Prices usually rise.
That doesn’t mean prices will go up every single year in every market. Real estate is local, and there can be short-term ups and downs. We’re seeing that in some places right now. You can even see it in the few annual dips in the visual above.
Comment below…What do you think will happen to the San Diego Real Estate Market?