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Are Home Values Really Overinflated?

Posted by David E. DeChant on Friday, March 2nd, 2018 at 9:51am.

Last week, the National Association of Realtors (NAR) released their most recent Existing Home Sales Report.According to the report:

“The median existing-home price for all housing types in January was $240,500, up 5.8 percent from January 2017 ($227,300). January’s price increase marks the 71st straight month of year-over-year gains.”

Seventy-one consecutive months of price increases may have some concerned that current home values may be overinflated.

However, at the same time, Zillow issued a press release which revealed:

“If the housing bubble and bust had not happened, and home values had instead appreciated at a steady pace, the median home value would be higher than its current value.”

Here are two graphs that help show why home prices are exactly where they should be.

The first graph shows actual median home sales prices from 2000 through 2017.

By itself, this graph could heighten concerns as it shows home values rose in the early 2000s, came tumbling down and are now headed up again. It gives the feel of a rollercoaster ride that is about to take another turn downward.

However, if we also include where prices would naturally be, had there not been a boom & bust, we see a different story.

The blue bars on this graph represent where prices would be if they had increased by the normal annual appreciation rate (3.6%). By adding 3.6% to the actual 2000 price and repeating that for each subsequent year, we can see that prices were overvalued during the boom, undervalued during the bust, and a little bit LOWER than where they should be right now.

Bottom Line

Based on historic appreciation levels, we should be very comfortable that current home values are not overinflated. Got more questions? Talk to a REDCO Agent today!

 

 

 

 

 

 

 

Source: https://www.keepingcurrentmatters.com/2018/03/01/are-home-values-really-overinflated/ 

3 Responses to "Are Home Values Really Overinflated?"

4 Reasons To Sell This Spring [INFOGRAPHIC] wrote: [...]Links

Are Home Values Really Overinflated?
It’s Tax Season… Use Your Refund To Jump Start Your Down Payment Savings!
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Posted on Monday, March 5th, 2018 at 10:28am.

Housing Market Expected To “Spring Forward” This Year wrote: [...]Links

4 Reasons To Sell This Spring [INFOGRAPHIC]
Are Home Values Really Overinflated?
It’s Tax Season… Use Your Refund To Jump Start Your Down Payment Savings!

[...]

Posted on Tuesday, March 6th, 2018 at 9:46am.

Competition Is Coming, Are You Thinking Of Selling Your Home? wrote: [...]Forward” This Year
4 Reasons To Sell This Spring [INFOGRAPHIC]
Are Home Values Really Overinflated?




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Posted on Wednesday, March 7th, 2018 at 12:22pm.

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