It was bound to happen, and it finally did.
Last month, according to a new report from the National Association of Realtors (NAR), real estate prices finally went negative,
“The median existing-home prices for all housing types in February was $363,000, a decline of 0.2% from February 2022 ($363,700), as prices climbed in the Midwest and South yet waned in the Northeast and West. This ends a streak of 131 consecutive months of year-over-year increases, the longest on record.”
All good things, right? Though at first, this might sound odd. I myself wrote back in September last year that prices had finally started to decline. But those were month-over-month prices. In normal times, even when the market is flat, prices tend to increase in the summer months and decrease in the winter months.
However, over the last few years, real estate prices have simply been on an almost straight trajectory upward, leaving the typical seasonal cycle in the dust. That trend ended last year. But despite monthly prices declining, the more closely monitored year-over-year price index was still up. Now, for the first time since the bottom of the Great Recession, year-over-year prices are down.
The average price of a home in February 2023 is ever-so-slightly lower than there were in February 2022.
Of course, 0.2% (or $700) is nothing to lose your head over. Especially when you look at the overall trend, that last, tiny little dip is the current “housing crash.”
It should be noted, however, that this is in nominal prices. When taking inflation into account, prices are down a bit more substantively. As Bill McBride notes,
“In real terms (using CPI less Shelter), the national index is 4.6% below the recent peak, and the Composite 20 index is 6.3% below the recent peak in 2022.”
Oddly…