Are Home Prices Dropping? Real estate industry thought leader Brian Icenhower explains the confusing state of home prices in this shifting market.
The big question: are home prices dropping right now? This, to me, is where the media has stooped to a new low. It’s all about headlines and click bait. Learn how to decipher between fear-based talking points and the facts. And, take this information and educate your clients!
VIDEO: Are Home Prices Dropping?
Seasonal trends vs. yearly trends
The media loves to drive fear. But this time, they are trying to justify it with data and stats. They are showing that home prices are dropping month over month.
Understand what this data means. It means they are comparing, for example, July to August, or August to September. From one month to the next, they are showing that home prices are going down.
Typically, when we look at home price trends, we look at the data year over year. And the reason for that is: seasonality. Any Realtor that has been in the game more than a year knows that there are trends that housing prices follow throughout a calendar year.
Month over month trends are affected by seasonality. The general public does not know or understand this concept. So, are home prices dropping? Yes — month over month.
Are home prices dropping? Yes, every year at this time.
Home prices always go down at the end of summer and the beginning of fall. Always! Higher priced homes sell in the spring and summer. Why? That’s when everyone wants to sell their home. There are a lot of reasons.
It’s the most convenient time to sell because photos look better, school’s out, the weather is nice.
People who sell in the fall and winter sell because they are forced to, for one reason or another. (Job change, move, life change, etc.)
Why the median sales price drops in late summer every year
Luxury homes sell during the spring and summer. Not many luxury homes sell in the fall and winter. So, of course, the average price of homes sold is going to go down dramatically during the fall and winter. Houses being sold during these seasons have a lower median price because there are less luxury homes sold to bring the average up!
That’s why when you look at any graph of month-over-month prices you will see this downward trend every single year.
Fear based media marketing
If you know anything about how the internet (and news media industry in general) works, you know that fear sells. Media companies know this, too, and that’s what they are selling you. Fear.
This is why you are seeing crazy media behavior when it comes to the housing market. Are home prices dropping? Yes, but look at the data more closely. Don’t simply read the headlines while you sip on your morning coffee. Dig deeper. What is the media selling you, here?
The housing market is not the stock market
The housing market doesn’t show prices going up and up and up … and then suddenly, CRASH! A huge, dramatic drop.
Quite the opposite happens. In fact, when we do see prices drop year over year, during a recession, for example, we see a very quick recovery.
Are home prices dropping? Facts over fear.
Year over year, the media sales price of houses sold is up 12%. Look at the data. Look at the dates. You can see in our graphic, below, the home price trends. (You can download a high-res version of this graphic FREE at the end of this blog.)
This is your average home price, going all the way back to the 1960s. Home prices have always increased. All the way until we hit the Great Recession. There was a dip and it took a few years to get our equity back. Then, it continued to increase.
Since then, you can see that we are on an even steeper incline. Worst case — we experience a dip. But it recovers quickly. Are home prices dropping when you look at this graph? No. This is year over year. This is a holistic view. You can zoom out, past the seasonality of the real estate industry.
Are your clients trying to “time the market”?
Stop this foolishness. Anyone who says they want to “wait until the market shakes out” is going to lose out.
If a client is buying and selling a personal residence at the same time, if they sell low, they will buy low. If they sell high, they will buy high. It equalizes.
If you are working with a client that is investing, yes, there is something to “timing the market.” In that case, buy today, not tomorrow.
FREE DOWNLOAD: Median Sales Price of Houses Sold Infographic
This infographic is today’s FREE download for subscribers. Use this helpful graphic to help your clients understand facts over fear.
Want to learn more?
- Read The High-Performing Real Estate Team. You can buy Brian Icenhower’s best-selling book on Amazon.
- Subscribe to The Real Estate Trainer Podcast. You can find it on Apple Podcasts, Google Podcasts, Spotify, Podbean, and anywhere you listen to your favorite podcasts.
- Join the Real Estate Agent Round Table. We are always posting fresh content — everything from market updates to free templates — and host dynamic discussions with the industry’s top producers.
- Subscribe to our newsletter. In the sidebar of this blog, you’ll see a subscription sign-up form. You’ll be the first to find out about our new resources, free downloads, premium online courses, and the latest promotions.
- Reach out and talk to an ICC coach. Not sure which of our coaching programs is right for you? Let us help you.