Why Home Prices Continue to Climb

Embarking on the journey of buying a new home or selling your existing one can be an emotional rollercoaster, especially with the fluctuating housing prices. This experience often intertwines financial aspirations, uncertainties, and a touch of anxiety, a path many have tread before.

However, for those hesitating to make a move due to fears of a potential drop in home prices, it’s essential to recognize that the trend is not pointing downwards. Contrary to these concerns, national statistics from various sources (Black Knight, Zillow, and Freddie Mac) indicate a consistent rise in home prices this year (refer to the accompanying graph).

The graph illustrates a significant increase in home prices in the first half of 2022 (indicated by the green bars on the left). These steep rises were, however, unsustainable.

In response, the latter half of the year saw a corrective phase with slight price dips (marked in red). These decreases were minimal and temporary, yet they garnered considerable media attention, fueling consumer uncertainty and fear.

What has been less emphasized is the trend in 2023. Prices are climbing again, albeit at a steadier rate (the green bars on the right). After the extreme hikes and subsequent corrections in 2022, the current return to more typical rates of price appreciation is a positive sign for the housing market.

Orphe Divounguy, Senior Economist at Zillow, summarizes the past year’s housing market trends:

“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. . .”

As the year progresses, it’s typical for home price appreciation to slow down. It’s crucial to differentiate between this slowing growth rate and actual price declines. A deceleration in price increase is still an increase.

Factors Behind the Current Rise in Home Prices

A key driver of the recent increase in home prices is the ongoing shortage of homes relative to buyer demand.

Higher mortgage rates have tempered buyer demand but also reduced housing supply. This is partly due to the mortgage rate lock-in effect: homeowners may hesitate to sell and relinquish a low mortgage rate, only to face a higher rate on a new property.

This dynamic affects both buyers and sellers, altering the supply-demand balance in the housing market. Despite a decrease in demand due to higher rates, the shortage of available homes keeps pushing prices up. As Freddie Mac notes:

“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 . . .”

Implications for You

For Buyers: If you’ve been delaying a home purchase due to fears of decreasing property values, the resurgence in home prices should offer reassurance. Investing in a home remains a path to owning an asset that typically appreciates over time.
For Sellers: If concerns about fluctuating home prices have made you hesitant to sell, now might be the time to act. Partnering with a real estate agent and listing your property could be wise, as recent data suggests a favorable shift in home prices.

Bottom Line

If concerns about falling home prices have been holding you back, current data indicates a nationwide trend of rising prices, albeit at a more normal pace. Connect with Countryside Homes NJ and RE/MAX Select today to explore how these trends are playing out in our local market.

Client Testimonials for Countryside Homes NJ

At Countryside Homes NJ and RE/MAX Select, we pride ourselves on delivering exceptional service to our clients. But don’t just take our word for it—read what our satisfied customers have to say. From first-time homebuyers to seasoned real estate investors and new home builders, our clients appreciate our dedication, expertise, and commitment to their success. Here are some of their stories.

David R. New Homeowner

Collaborating with Keith LaBrunda and Heather Montalbano from Countryside Homes NJ and RE/MAX Select streamlined the home-buying process for me. They were attentive to my needs and preferences, ensuring they understood exactly what I was seeking in a home and what was within my financial comfort zone. Keith and Heather provided invaluable assistance during the offer stage, sharing insightful details that enabled me to place a successful bid on my desired property. They recommended associates to assist me with securing a mortgage, conducting home inspections, and acquiring homeowner's insurance. Post-purchase, they continued to be a resource, suggesting local companies to contact for internet, water, waste management, oil, and other essential services. The experience of purchasing a home with Keith LaBrunda and Heather Montalbano was seamless and enjoyable.

Rachel and Andre First Time Homebuyer

As first-time homebuyers, the process of finding and purchasing a home felt daunting. But from the moment we reached out to Heather and Keith at Countryside Homes NJ and RE/MAX Select, our worries were put to rest. Their team was incredibly patient, answering all our questions and guiding us through every step. They took the time to understand our needs and preferences, ensuring that we found the perfect home in a neighborhood we love. We were especially impressed by their vast knowledge of the local market and their commitment to ensuring we got the best deal possible. We can't thank them enough for making our dream of homeownership a reality. If you're in the market for a new home, we highly recommend Heather and Keith at Countryside Homes NJ and RE/MAX Select. They truly go above and beyond for their clients!

Prestia Family New Homeowners

From the moment we began our home search, Heather at Countryside Homes NJ and RE/MAX Select stood out as the epitome of professionalism and dedication. Her team's in-depth knowledge of the Rockaway Borough area and their unwavering commitment to our needs made our home buying journey not only smooth but truly enjoyable. As new homeowners in Rockaway Borough, NJ, we can confidently say that choosing Heather at Countryside Homes NJ and RE/MAX Select was the best decision we made. Her expertise, patience, and genuine care for our family's needs transformed what could have been a stressful process into a memorable and joyous occasion. We are beyond grateful for her support and would highly recommend her and her team to anyone looking to find their dream home. Thank you for turning our dreams into reality!