We can look to the Home Price Expectation Survey to get an idea of where expert economists project home values to go in the next five years both locally and nationally.
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Where are home prices headed in the southeastern Michigan market? We can find out by taking a look at the latest Home Price Expectation Survey in which expert economists were asked what will happen with prices over the next five years.
Before the bubble burst between 1987 and 1999, the national annual appreciation was 3.6% and during the bubble, that nearly doubled. During the bust, prices fell 5.4% annually. During the recent recovery from 2012 to 2016, it has been about 5%. This all basically just means that the market has recovered. Home prices in most parts of the country have reached that 2008 number or will soon reach it.
What does this all mean?
The experts predict that we'll be below 5% appreciation this year, which would be higher than the historical 3.6% but below the appreciation in recent years. Over the next few years, appreciation will slow as the market swings the other way. Real estate values will experience lower than 3.6% appreciation according to the experts. In the video above, you can see the projection that the acceleration of appreciation will slow. The good news is that no one projects prices to fall.
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It's safe to say that now is a great time to buy a home.
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In the video, you can also see cumulative house appreciation projections through 2021. By then, they project all prices to increase.
Now let's look at what happens with the equity of an example house based on appreciation. In this example, we can see that someone who bought a house in January of 2017 would see a gain of $42,898 in appreciation by January of 2022 if the projections hold true. I think it's safe to say that now is a great time to buy a home. Core Logic also projected year-over-year appreciation broken down by state, and Michigan (5.7%) is projected to outperform the national projection (4.7%).
With home prices going up, homeowners are gaining equity. Keep in mind that if you've been thinking about making a move, you probably have positive equity because of this. If you're interested in an equity evaluation on your home or you have any questions about buying or selling a home, just give us a call or send us an email. We'd be glad to help!
