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The housing market is changing. That’s not altogether surprising, since what goes up and up and up must at least level off eventually.
Housing prices have climbed furiously for 10 years since the catastrophic housing crisis ended in 2012. But there are signs that may be coming to an end.
What does all this mean for future home prices?
It’s too soon to know for sure. But we put a finger to the wind by gathering opinions of some top housing experts. Here is a look at what’s going on, followed by their predictions and speculations.
Recent trends in housing
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The past few months have been a roller coaster for those in the housing market. Recent changes include:
- Slowing price growth. The previously scorching rate at which prices were growing now is falling off. In the first half of 2022, home prices grew by about 11% — something that has only happened over four entire years of the last 35. But the year-over-year rate slowed from nearly 21% in April to just under 20% in May and to 18% in June. Economists call this trend price “deceleration.”
- Dropping home sales. The number of existing home sales is dropping — by 5.9% in July compared with June, according to the National Association of Realtors. That was the sixth consecutive month of drops.
- Some falling prices. The median price of an existing (not new) home fell — from July’s record high of $413,800 to $403,800 in August, the NAR says. That’s one month. Will declines continue? Sales and price numbers lag by a month or two, so it’s only possible to see what’s going on in hindsight.
- Lower median home value. The median home value fell 0.1% in July from June nationally, the real estate analysts at Zillow say. It’s the first monthly decline, nationally, since 2012.
Yes, prices will continue to drop for the rest of 2022, the AEI forecasts
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Ed Pinto, director of the American Enterprise Institute’s Housing Center, expects home prices to fall.
Pinto predicts, according to Fortune Magazine, that “by the December holidays,” prices will have fallen by 4% nationally in the second half of the year.
Average year-end home prices will be 6% higher than the year before, he says, but only because the full effect of the lower prices will be masked by rapid price growth numbers earlier in 2022.
Even so, he adds, “America faces nothing resembling an outright crash.”