Are Home Prices Softening or Are They Falling?
We are starting to see reports that more accommodation is coming in the market and demand for a buyer is not increasing at the same pace at the beginning of this year. The result will be several headings written in order to solve this effect, which will be at domestic prices in these two situations.
Many of these headline writers will confuse “softening home prices” with “falling home prices,” but there is a major difference between the two.
The data will begin to show that home values are not appreciating at the same levels as they had over the last several years (softening prices). This does NOT mean that prices are depreciating (falling prices).
Here is an example: Over the last several years, national home values increased by more than 6% annually. If you had a home worth $300,000 at the beginning of the year, it would be worth $318,000 by year’s end. If the appreciation rate “falls” to 4%, that $300,000 house would be worth $312,000 at the end of next year — a $6,000 difference.
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