Category: Forecast for Rest of 2022

WEST CHESTER, PA. What’s Going on with Home Prices?

If you’re thinking about buying or selling a home this year, you may have questions about what’s happening with home prices today as the market cools. In the simplest sense, nationally, experts don’t expect prices to come crashing down, but the level of home price moderation will depend on factors like supply and demand in each local market.

I will cover three areas in this blog.

What is going on in the local West Chester real estate market.
What some National Experts are saying about the real estate market.
Share my feelings about where we headed as local sellers and buyers decide what to do.

What is going on in the local West Chester real estate market?

Price is almost always the most important variable for almost everybody. Here is what has happened since January 2021.

Median sales price is up by a lot, from $625,000 in 2021 to $700,000 in 2022, Year to Date through November, That is a very hefty 12% increase.

Median Sales Price by Year, Single Family Homes, West Chester, PA

One of the huge factors that drives price changes is months of inventory. Six months of inventory is needed for a “Balanced Market”, one where the numbers of people who want to buy and people who want to sell is about equal. Under this scenario, prices will increase but only at about the rate of inflation. Under six months means there are more buyers than sellers (higher demand, lower supply). That indicates prices will increase faster than the rate of inflation.

For the last two years, inventories have generally been in the 2-4 month range. Again that indicates a market with strong price appreciation.

Another good indicator is how long is it taking for houses to sell. A “normal” market generally takes about 30 days. Again for the last two years, days on market has been at or under one week. That also indicates strong upcoming price appreciation.

That means, moving forward, home price appreciation will continue to vary by location, with more significant changes happening in overheated areas. Here’s a quick snapshot of what the experts are saying: Danielle Hale, Chief Economist at realtor.com, says:

“The major question on the minds of homeowners and aspiring buyers alike is what will happen to home prices. . . Soaring prices were propelled by all-time low mortgage rates which are a thing of the past. As a result, home price growth is expected to continue slowing, dipping below its pre-pandemic average to 5.4% for 2023, as a whole.”

Mark Fleming, Chief Economist at First American, says:

“House price appreciation has slowed in all 50 markets we track, but the deceleration is generally more dramatic in areas that experienced the strongest peak appreciation rates.”

Taylor Marr, Deputy Chief Economist at Redfin, says:

“For those bearish folks eagerly awaiting the home price crash, you’ll have to keep waiting. As much as demand is pulling back supply is as well reducing downward pressure on prices in the short run.”

John Paulson, Founder of Paulson & Co., says:

“It’s true – housing may be a little frothy. So housing prices may come down or they may plateau . . .”

What Does This Mean for You?

With conflicting indicators (interest rates up, low inventories, houses selling quickly, prices still increasing), forecasts are more uncertain than normal. My opinion is that for our area, the combination of high demand and low inventory will continue to drive price increases, albeit at a lower rate than the last couple of years.

The best way to get the answers you need is to lean me and I would like to be your local real estate advisor. I can explain the latest trends in your specific market so you can make a confident and informed decision on your next step toward buying or selling a home.

Bottom LineS

To get a quick update of what is new in real estate, click here to check out our new videos.

Interested in what recent clients think of my service? Click here to read what they say.

Interested to know what your house is worth? Click here to get the most extensive and accurate estimate of home value that is available on the Internet. No cost or obligation of course.

No doubt, the housing market is shifting, and it can be a confusing place right now. I suggest that we connect so that I can help you make confident and informed decisions about what’s happening. Minimize the fear or uncertainty that could change your plans. If you’re unsure about how to make sense of what’s going on in today’s housing market, text or call me at 484-574-4088 or go to my web site, (johnherreid.com) and lets set up a time to meet, either on line or in person. I have the software so that we can meet virtually and make the best use of your time.

What’s Ahead for Home Prices IN WEST CHESTER NEXT YEAR?

As the housing market cools in response to the dramatic rise in mortgage rates, home price appreciation will probably be cooling as well. And if you’re following along with headlines in the media, you’re probably seeing a wide range of opinions calling for everything from falling home prices to ongoing appreciation. But what’s true? What’s most likely to happen moving forward?

While opinions differ, the most likely outcome is we’ll fall somewhere in the middle of slight appreciation and slight depreciation. Here’s a look at the latest expert projections so you have the best information possible today.

What the Experts Are Saying About Home Prices Next Year

The graph below shows the most up-to-date forecasts from five experts in the housing industry. These are the experts that have most recently updated their projections based on current market trends:

As the graph shows, the three blue bars represent experts calling for ongoing home price appreciation, just at a more moderate rate than recent years. The red bars on the graph are experts calling for home price depreciation.

While there isn’t a clear consensus, if you take the average (shown in green) of all five of these forecasts, the most likely outcome is, nationally, home price appreciation will be fairly flat next year.

What Does This Mean?

2022 was clearly an aberration with double digit home value increases in much of the United States as we recovered from COVID

Basically, experts are divided on what’s ahead for 2023. Home prices will likely depreciate slightly in some markets and will continue to gain ground in others. It all depends on the conditions in your local market, like how overheated that market was in recent years, current inventory levels, buyer demand, and more.

And the Home Price Expectation Survey (HPES) from Pulsenomics, a poll of over one hundred industry experts, also calls for ongoing appreciation of roughly 3.0 to 4% from 2023-2026. This goes to show, even if prices decline slightly next year, it’s not expected to be a lasting trend.

To understand what is probably going to happen to home prices in West Chester next year, it is helpful to understand where we have been in recent years and how the present market stacks up with that track record. Below is a table that shows those data for the West Chester Area School District.

Year	West Chester Schools
	Sale Price, Median
2018	$465,000
2019	$475,000
2020	$515,000
2021	$604,000
2022	$675,000

We had robust appreciation in home values over the past five years. From $485,000 in 2018 to $675,000, in 2022 (39.1%). Something of a drop off in 2023 could be expected. But recent sales are indicating ongoing price increases. Although at a lower rate because of the increased mortgage rates.

One could make a case that prices are already declining. In fact, the normal suspects who are always looking for Armageddon are predicting a housing market collapse. But lets take a look at the facts. The below table shows median sales price, by month, for a single family home in 2022.

Month	West Chester Schools
	Sale Price, Median
Jan	$575,000
Feb	$618,500
Mar	$700,250
Apr	$690,000
May	$725,000
Jun	$738,750
Jul	$676,000
Aug	$622,500
Sep	$655,000
Oct	$622,500
Nov	$552,975
Dec	$635,000

The peak median price of $738,750 in June, compares to a median price of $635,000 in December. A casual observer would say, WOW, THAT IS A $103, 750 DROP (14%). THINGS MUST BE GOING TO HELL IN A HAND BASKET. But wait, maybe not so fast. That is a common pattern that recurs every year from mid Summer to Fall. Normally the price drop is about 9-10% so maybe 14% does mean that prices are actually going down. Only time will tell and I will keep you posted.

To get a quick update of what is new in real estate, click here to check out our new videos.

Interested in what recent clients think of my service. Click here to read what they say.

Interested to know what your house is worth. Click here to get the most extensive and accurate estimate of home value that is available on the Internet. No cost or obligation of course.

No doubt, the housing market is shifting, and it can be a confusing place right now. Let’s connect so that I can help you make confident and informed decisions about what’s happening in our market. Don’t let fear or uncertainty change your plans. If you’re unsure about where prices are headed or how to make sense of what’s going on in today’s housing market, reach out to me at 484-574-4088 or go to my web site, (johnherreid.com) and lets set up a time to meet, either on line or in person.

WEST CHESTER, PA. WHAT’S GOING ON WITH HOME PRICES?