For Buyers
Home Values Rise Even as Median Prices Fall
Recent headlines have been buzzing about the median asking price of homes dropping compared to last year, and that’s sparked plenty of confusion. And as a buyer or seller, it’s easy to assume that means prices are coming down. But here’s the catch: those numbers don’t tell the full story.
Nationally, home values are actually rising, even if the median price is down a bit. Let’s break down what’s really happening so you can make sense of the market without getting caught up in the fear the headlines create.
Homes on the Market Right Now Are Smaller
The biggest reason for the dip in median price is the size of homes being sold. The median price reflects the middle point of all the homes for sale at any given time. And that’ll be affected by the mix of homes on the market.
To show you how this works, here’s a simple explanation of a median (see visual below). Let’s say you have three coins in your pocket, and you decide to line them up according to their value from low to high. If you have one nickel and two dimes, the median (the middle one) is 10 cents. If you have two nickels and one dime, the median is now five cents.
In both cases, a nickel is still worth five cents and a dime is still worth 10 cents. The value of each coin didn’t change. The same is true for housing.
Right now, there’s a greater number of smaller, less expensive homes on the market, and that’s bringing the overall median price down. But that doesn’t mean home values are declining.
As Danielle Hale, Chief Economist at Realtor.com, explains:
“The share of inventory of smaller and more affordable homes has grown, which helps hold down the median price even as per-square-foot prices grow further.”
And here’s the data to prove it.
Price Per Square Foot Is Still Rising
One of the best ways to measure home values is by looking at the price per square foot. That’s because it shows how much you’re paying for the space inside the home.
The median asking price doesn’t take into account the size of different homes, so it may not always reflect the true value. And the latest national price per square foot data shows home values are still increasing, even though the median asking price has dropped (see graph below).
As Ralph McLaughlin, Senior Economist at Realtor.com, explains:
“When a change in the mix of inventory toward smaller homes is accounted for, the typical home listed this year has increased in asking price compared with last year.”
This means that while smaller homes are affecting the median price, the average home’s value is still rising. According to the Federal Housing Finance Agency (FHFA):
“Nationally, the U.S. housing market has experienced positive annual appreciation each quarter since the start of 2012.”
So, while headlines may make it sound like prices are crashing, you don’t have to worry. With a closer look and more reliable data, you can see that prices are still climbing nationally.
But it’s important to remember that home prices can vary by region. While national trends provide a big-picture view, local markets may be experiencing different conditions. A trusted agent is the best resource to explain what’s happening in your area.
Bottom Line
The decrease in median price is not the same as a decrease in home values. The median asking price is down mostly due to the mix of smaller, less expensive homes on the market.
The important thing to focus on is the price per square foot, which is a better indicator of overall market value—and those prices are still going up. If you have questions about what home prices are doing in your area, reach out to a local real estate agent who can provide insights on your specific market.
Are you wondering if you’re on track to retire someday?
According to Intuit, 69% of people say today’s financial environment makes it tough to plan for the future, and 68% aren’t sure they’ll ever be able to retire. That’s why many people are exploring new ways to build stability and long-term income.
And that’s where real estate comes in.
Why Real Estate? Here’s What It Can Do for You
If you’re able to make the numbers work, buying a second home can be a powerful tool for your future retirement. It could help you:
- Build wealth over time: As home prices rise through the years, your second home should grow in value and increase your net worth.
- Generate extra income: Renting the home could bring in some extra income you can add to your existing retirement savings. Just remember, some of the rent coming in will need to be used to pay that mortgage and maintain that house.
- Profit in the future: You may decide to sell the second home down the road and use the profit from that sale to give your retirement funds a boost.
- Diversify your financial assets: Real estate offers a tangible asset that can help reduce your dependence on just stocks or savings, making your overall financial picture more stable.
Most Second Homeowners Aren’t Big Investors
And if you’re thinking: wait, owning multiple homes is only for big investors – data shows that’s not necessarily true. Many homeowners who buy an additional property aren’t the big investors you hear so much about. They’re people like your neighbors.
In fact, data from BatchData and CJ Patrick Company shows 85% of people who own more than one property have just 1 to 5 homes (see graph below):
That means most who own multiple homes are people (not large investors) who’ve bought an extra home to rent out or hold onto for later.
Why Now Might Be the Right Time
And right now, the door may be opening for buyers like you. According to Danielle Hale, Chief Economist at Realtor.com:
“. . . the balance of power in the housing market keeps shifting in favor of homebuyers. . . A confluence of factors—including more homes for sale, rising price cuts, and slower-moving inventory—is giving buyers more leverage than they’ve had in years . . .”
If you live in an area where home prices are expected to rise, buying another property now and selling it later could help fund your future. Or you could rent it out and earn income now.
Start with Just a Few Trusted Pros
If this idea sounds interesting, the most important first step is to connect with a few key people who can guide you through the process:
- A local real estate agent who understands the market
- A lender who specializes in second home or investment loans
Surrounding yourself with the right pros can help you make confident decisions from day one.
Bottom Line
Talk with a local real estate agent about what’s possible. They’d love to help you explore whether owning a second home could bring you more security and peace of mind for the road ahead.
If a second home could help you retire earlier or with more freedom, would you want to take a closer look?
Some Highlights
- Prices, rates, and finding the right home are three of the biggest challenges for buyers today. You may find better luck with all 3 if you look at newly built homes.
- There are more available. Builders are more flexible on prices right now. And people who buy new homes tend to get lower rates in this market thanks to the incentives builders can offer.
- Connect with an agent if you want to see the new builds available in and around your area.
Buying a home is exciting… until you start thinking about the down payment. That’s when the worry can set in.
“I’ll never save enough.”
“I need a small fortune just to get started.”
“I guess I’ll just rent forever.”
Sound familiar? You’re not alone. And you’re definitely not out of luck.
Here’s the thing: a lot of what you’ve heard about down payments just isn’t true. And once you know the facts, you might realize you’re a lot closer to owning a home than you think.
Let’s break it all down and bust some big down payment myths while we’re at it.
Myth 1: “I need to come up with a big down payment.”
This one stops a lot of people in their tracks. A recent poll from Morning Consult and NeighborWorks shows 70% of Americans think they need to put at least 10% down to buy a home. And 11% aren’t sure what’s required at all (see graph below):
The truth? According to the National Association of Realtors (NAR), the typical down payment for first-time buyers has been between 6% and 9% since 2018. But there’s more to the story. If you qualify for an FHA loan, you may only need to put 3.5% down. And VA loans typically don’t require a down payment at all. So, there are options out there that can really make a difference for some buyers.
Myth 2: “It’ll take forever to save up for a down payment.”
Sure, saving can take time. But it may not have to be as long as you think. In many states, reaching your goal can happen faster than you might expect, especially when you know your budget and have a clear savings plan.
According to a new study, the amount of time varies depending on where you live. The map below shows, on average, how many years it takes to save up for a 10% down payment based on typical home values and income levels in each state (see map below):
But remember, in most cases you won’t even need a down payment as large as 10%. Plus, no matter how much money you end up putting down, it won’t all have to come out of your pocket. Here’s why.
Myth 3: “I have to do it all on my own.”
This is one of the biggest myths of all. The reality is, there are thousands of down payment assistance programs out there, and the same poll from Morning Consult and NeighborWorks shows 39% of people don’t even know about them. That means a lot of potential homebuyers could already be closer to homeownership – they just don’t realize it.
These assistance programs are designed to help people like you who are ready to own a home but just need a little support getting started. As Miki Adams, President at CBC Mortgage Agency, explains:
“With high interest rates and soaring home prices, down payment assistance is more essential than ever.”
Bottom Line
If you’ve been putting off buying a home because the down payment feels like too much to tackle, talk to a local real estate agent. You may not need as much as you think, and there are plenty of resources out there, so you don’t have to do it alone. You just need an expert to point you in the right direction.
If the down payment wasn’t the thing holding you back, would you be ready to start your home search?
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