After almost two years of double-digit increases, many experts thought home price appreciation would decelerate or happen at a slower pace in the last quarter of 2021. However, the latest Home Price Insights Report from CoreLogic indicates while prices may have plateaued, appreciation has definitely not slowed. The following graph shows year-over-year appreciation throughout 2021. December data has not yet been released.
As the graph shows, appreciation has remained steady at around 18% over the last five months.
In addition, the latest S&P Case-Shiller Price Index and the FHFA Price Index show a slight deceleration from the same time last year – it's just not at the level that was expected. However, they also both indicate there’s continued strong price growth throughout the country. FHFA reports regions of the country, including Grays Harbor, still experienced double-digit appreciation. The Case-Shiller 20-City Index reveals all 20 metros had double-digit appreciation.
Why Haven’t We Seen the Deeper Deceleration Many Expected?
Experts had projected the supply of housing inventory would increase in the last half of 2021 and buyer demand would decrease, as it historically does later in the year. Since all pricing is subject to supply and demand, it seemed that appreciation would wane under those conditions.
Buyer demand, however, did not slow as much as expected, and the number of listings available for sale dropped instead of improved. The graph below uses data from realtor.com to show the number of available listings for sale each month, including the decline in listings at the end of the year.
Here are three reasons why the number of active listings didn’t increase as expected:
1. There hasn’t been a surge of foreclosures as the forbearance program comes to an end.
2. New construction slowed considerably because of supply chain challenges.
3. Many believed more sellers would put their houses on the market once the concerns about the pandemic began to ease. However, those concerns have not yet disappeared. Luke Burgher of Grays Harbors Oly Pen Real Estate sums it up:
“Some market analysts see a possibility home price appreciation might slow, or decelerate in 2022. However, based on supply and demand related issues, most analysts do not expect the deceleration to be swift or severe.”
Regardless, regional markets can sometimes experience conditions not reflected at a national level. If you have any questions about the market in Grays Harbor, be sure to give Oly Pen Real Estate a call. We would love to discuss your options.