Why Home Prices Keep Going Up

By John West

We understand that our clients are making big life decisions and are trusting us to help them make sure those decisions are wise ones. For us, it is not about transactions, it's about relationships.

If you’ve been thinking about buying a home or upgrading by selling your current house, you’re likely familiar with the roller coaster of emotions from fluctuating home prices. Over the past 18 to 24 months, it’s been quite a ride that has prompted many to step off and wait for things to stabilize.

However, if concerns about home prices dropping have been holding you back from making a move, it’s important to recognize that they’re not on a downward trend; in fact, they’re increasing. Recent data from various sources this year consistently shows that home prices have likely hit their lowest point and have been steadily rising. 

In the first half of 2022, home prices experienced a significant rise, but these gains were unsustainable. In the second half of the year, prices underwent a correction; however, these declines were shallow and short-lived. Despite this, media headlines focused on these drops, causing fear and uncertainty in the market. What hasn’t been fully covered so far in 2023 is that prices continue to rise, but at a more normal pace. This consistent and moderate increase is positive news for the housing market.

So, if rates are high, why are prices increasing? One significant reason is the lack of supply of homes for sale compared to demand. While higher mortgage rates have moderated buyer demand, they have also reduced the supply of available homes. The mortgage rate lock-in effect plays a role—when rates rise, homeowners may be reluctant to sell and lose their current low mortgage rates, contributing to the limited supply. With more people wanting to buy than there are available homes, prices continue to rise.

Here’s the bottom line: Buyers who have been waiting on the sidelines should have no worries about re-entering the housing market. Buying a home is an opportunity to own something that typically appreciates over time. Sellers who have hesitated due to concerns about changing home prices should consider putting their house on the market now. The latest data indicates that home prices have turned in their favor.

What are your real estate goals for the next year? Let’s discuss them now so we can develop a plan to help you achieve them. Call our team today or email us with your questions. We look forward to hearing from you!