Slowing Appreciation Starting to Show Up in the Charts

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Filed under: Market Comentary

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Today, I want to revisit a chart that we looked at a few months ago. I’m bringing it up again because we’ve received new housing data in recent days, and it is still showing low inventory.

What is Affecting Low Inventory?

There are a lot of things happening behind the scenes affecting this situation, such as supply chain issues (we are all tired of hearing that!) and more. The supply chain is impacting the builder’s ability to get the products they need.

There are also issues with the labor shortage – we’re having a hard time getting people to go back to work. These two factors are having an undeniable influence on causing inventory to be so low.

Recent Years vs. Current Appreciation Trends

Today’s info is just a bit of an offset to these issues.

Watch the video and you will see in information here in the Temecula-Murrieta Region. It shows the average home prices in comparison with a 4% per year increase in appreciation. We’re looking at 19 years of data.

After the peak before the 2008 crash, we’ve been working our way back up again in recent years. Now, we’re at a point where the value of home prices has crossed over the red line again – I feel like the further off we are from that trend, the more uncertain the market gets.

The good news is that it is finally starting to level off a little bit, which is what we want to see. If appreciation is increasing too quickly, then there are a lot of issues that can up, such as affordability.

Trends in the Coming Months

Appreciation is starting to flatten out, and I think we’ll see more of this trend in the coming months. In my opinion, it’s a good indicator that things are moving in the right direction for the real estate market.

If you are looking at options to buy, sell, or refinance, I’m always here to answer your questions about financing and industry trends. Reach out to me any time for personalized information.

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