The value of a home nationwide is expected to rise by 1.3% in the 12-months through July 31, 2024, down from expectations for a 2.8% rise expected in the 12 months through the end of July 2023. However, expectations for home-price values varied widely by geographic region, and homes with higher values are expected to experience much higher growth in value than less-costly houses.
“While western states had strongest year-ahead house price expectations in 2021 compared with other areas of the country, the region now exhibits the weakest expectations for future growth,” according to the August 4 report by Joanne Hsu, Ph.D., director of consumer surveys at University’s of Michigan. Forty-six percent of consumers surveyed in western states expect home values to rise, down from 86% a year ago. Although 12% of western-state consumers surveyed in 2022 predicted home values would decrease over the next 12 months, this July 21% of western-state homeowners surveyed expect a decrease in value through the end of July 2024.
Homes in the top tercile of value — the top third percentile — had the strongest prospects both in the short and long run, according to the report. In the 12 months through the end of July, the value of a home in the top tercile is expected to rise by 1.9%, about twice as much appreciation as is expected from home in other 66% of the country. In addition, over the next five years homes valued in the top tercile are expected by consumers to grow in value by 4% annually versus 2.1% for home in the lowest tercile and 3.1% for home in the middle tercile.
“Given the importance of homeownership for wealth accumulation, if these expected trends bear out, wealth inequality may widen,” according to Prof. Hsu. “Indeed, consumers with homes valued in the bottom tercile have had declining expectations over the last few years, indicating that affordability of these lower-valued homes may remain stable but that the wealth-building prospects of homeownership for lower-income families may not be strong.” Homeowners who perceived growth over the last year expect that growth to continue through July 2024.
The Standard & Poor’s 500 stock index closed Friday at 4405.71, up +0.67% from Thursday, and up +0.82% from a week ago. The index is up +96.91% from the March 23, 2020, bear market low and -8.15% lower than its January 3, 2022, all-time high.
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