Experts in the real estate industry use a number of terms when they talk about what’s happening with home prices. And some of those words sound a bit similar but mean very different things. To help clarify what’s happening with home prices, especially here in Rochester, and where experts say they’re going, here’s a look at a few terms you may hear:
Appreciation is when home prices increase
Depreciation is when home prices decrease
Deceleration is when home prices continue to appreciate but at a slower pace
Where Home Prices Have Been in Recent Years
For starters, you’ve probably seen some home prices have skyrocketed over the past two years, with local homeowners receiving tens of thousands of dollars over their asking price, but homes in Rochester and the surrounding areas, have actually been appreciating long before that. You might be surprised to learn that home prices have climbed for 122 consecutive months (see graph below):
As the graph shows, houses have gained value consistently over the past 10 consecutive years. But since 2020, the increase has been more dramatic as home price growth accelerated.
So why did home prices climb so much? It’s because there were more buyers than there were homes for sale. There was also an influx of people moving to the Upstate New York area, from other cities around the country. Towns such as Henrietta, Brighton, Pittsford, Victor, Greece, Hilton, Spencerport, and other areas in Rochester saw lots of new homeowners relocate here. Another factor is that the millennial generation is now reaching the “home buying age” and many of them are starting to purchase their first (or possibly second) home. Trendy neighborhoods, such as Irondequoit, North Winton Village, Park Avenue, and the South Wedge are just a few of the areas that have been in high demand. All of these factors caused an imbalance, which put upward pressure on home prices throughout the Greater Rochester area because demand was high and supply was low.
Where Experts Say Home Prices Are Going
While this is helpful, context, if you’re a buyer or seller in the local Rochester market, you probably want to know what’s going to happen with home prices moving forward. Will they continue that same growth path or will home prices fall?
Experts are forecasting ongoing appreciation, just at a decelerated pace. In other words, prices will keep climbing, just not as fast as they have been. In the first half of the year, our sellers received an average of $28,000 more than the listed price of their home. While this number is high and quite exciting for our local sellers, it’s not as high as it was in 2021, where we had a few sellers receive upwards of $85,000 over the asking price. The graph below shows home price forecasts from seven industry leaders. None are calling for prices to fall (see graph below):
Mark Fleming, Chief Economist at First American, identifies a key reason why home prices won’t depreciate or drop:
“In today’s housing market, demand for homes continues to outpace supply, which is keeping the pressure on house prices, so don’t expect house prices to decline.”
And although the housing supply in Rochester is starting to tick up, it’s not enough to make home prices decline because there’s still a gap between the number of homes available for sale and the volume of buyers looking to make a purchase.
Terry Loebs, Founder of the research firm Pulsenomics, notes that most real estate experts and economists anticipate home prices will continue rising. As he puts it:
“With home values at record-high levels and a vast majority of experts projecting additional price increases this year and beyond, home prices and expectations remain buoyant.”
Experts forecast price deceleration, not depreciation. That means home prices in Rochester and surrounding areas will continue to rise, just at a slower pace. Let’s connect so you can get the full picture of what’s happening with home prices in Rochester, NY. We work with buyers and sellers all over Monroe County, from Farmington to Gates, Chili, Brockport, and everywhere in between. We’re looking forward to discussing your home-buying and selling goals.