When you want to buy or sell, one of the factors you’ll need to consider is the market value of your home. This will include determining where prices are in the current market and how these prices will change in the near future. Andrew Shader looks at the home prices forecast to help you determine your next move in selling or buying real estate.

The Real Estate Market Is Experiencing Uncommon Changes

Prior to 2020, home prices increased by an average of 3.8% annually. However, 2020 brought about some significant changes that still affect home prices. In that year, home prices rose by 6% — a very robust increase.

The onset of the pandemic and the factors influenced by that period of uncertainty had further long-term consequences for the market. In 2021, home prices appreciated by a full 12%. The increase was largely due to below-average interest rates and an influx of buyers entering the market.

As demand increased, home prices rose substantially. A slowing of new construction due to labor shortages and supply chain issues also played a role in driving up those prices. As a result, buyers could ask for higher sale prices, and more buyers were bidding for their properties.

Home Appreciation Levels Are Starting to Even Out

Many of the issues driving up home costs are starting to correct themselves. Labor shortages are becoming less problematic, which has helped alleviate supply chain issues. Additionally, interest rates are now higher than the historic lows of the past two years.

That’s not to say home prices won’t continue to see significant bumps in appreciation. Economists predict we’ll see a total home appreciation average of 10% for 2022. Since fewer homes were built this year, the supply of homes on the market is still considerably lower than normal. This explains why home prices continue to appreciate at such a high rate.

Home appreciation might have seen a sharper increase in 2022 if interest rates had not risen. Higher rates have prevented more new buyers from flooding the market. This led to lower demand, limiting real estate appreciation.

How Will This Trend Impact You?

Even though home appreciation rates are slowing, they are still rising at a higher than normal rate. This means your home will likely increase in value, and you’ll be able to earn a profit if you sell your home.

For buyers, increasing appreciation means your home will likely be worth more in the future than it is in today’s market. Even though you’re paying more for a home in the current market, you will still build equity in the coming years.

Tips from Andrew Shader

Andrew Shader is a successful entrepreneur in Fort Lauderdale, Florida. While he launched an early career in insurance, he currently focuses his energy on real estate investing. He uses a value-added approach to increase the potential returns on each property in which he invests. Andrew uses his experience and skills to read the market and recognize the hottest real estate investment opportunities.