Are Home Values Really Overinflated?

As a professional it is our duty to KNOW the market and where it is trending so that proper decision making can be made by our clients.

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.

Are Home Values Really Overinflated? | Keeping Current Matters

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.

Are Home Values Really Overinflated? | Keeping Current Matters

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.

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About Matthew Stewart Real Estate

Matthew Stewart Real Estate Team has nearly two decades and hundreds of homes SOLD success experience! Matthew Stewart consistently is in the top 5% of Real Estate agents in the Tri-County region of Sacramento (over 4,000 Realtors), which includes but is not limited to: Granite Bay, Roseville, Rocklin, Loomis, Lincoln, Orangevale, Folsom, El Dorado Hills, Penryn, Newcastle, Auburn, and others. He began his professional Real Estate career at the age of 19. He has achieved the designation of GRI - Graduate of Realtor Institute, of which less than 15% of Realtors nationally achieve. During his Real Estate career he created the exclusive event titled “Artrageous.” A Rocklin Real Estate community chalk art event in which he partnered with the Rocklin Chamber of Commerce during their annual Hot Chili Cool Cars event. Matthew Stewart Real Estate Team generated nearly $40,000 in four years of which they donated all proceeds to the Rocklin Visual and Performing Art programs. He was pursued by William Jessup University to create their Men’s Golf Program in 2007 from scratch, and stepped down after five years as head coach in 2012 to pursue other entrepreneurial endeavors. In his time there he was asked by collegiate coaches to head up the Cal-Pac Championship tournament, (which he orchestrated at Morgan Creek Golf course in Roseville), and was asked to coordinate and run the National Qualifying tournament in which he chose to hold at the prestigious Bayonet Golf Course in the Monterey area of California. He also was a member of the Golf Coaches Association of America. In addition to his Real Estate business and coaching collegiate golf, Matthew has been a professional actor and model, professional speaker/trainer, coached high school boys basketball to a 55-9 record, including a 42 game winning streak, and built a direct sales business that spanned across the globe. He achieved levels that were in the top 5% of income earners world wide for the direct sales industry. He also was just one of 300 independent business owners that qualified for the "Seas the Moment" contest which spanned over 40 countries and over 1 million participants. If you would like to get some information regarding Matthew Stewart real estate in the Greater Sacramento Area, including Granite Bay, Roseville, Rocklin, go here: http://www.matthewstewartrealestate.com If you would like to get some information about William Jessup University, go here: http://www.jessup.edu

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