Since the 70’s, home prices have risen 5% on average each year. That doesn’t mean housing costs actually go up exactly 5% yearly, the percentage varies per year for an overall average of 5%. And as we’ve seen, prices have gone down and then back up drastically in the past short while.

Based on this 5% theory and an average housing cost of $52,000 in 1974, the average home value today should be $310,000. We are currently at an average home cost of $445,000, an enormous $135,000 above the projected 5% per year.

What does this mean for home buyers and sellers? It means housing costs are expected to drop in the next few years. That can make a significant impact on those considering downsizing to free up money for retirement. With a predicted 10% decrease over the next few years, if you were planning on selling a $900,000 home to boost your bank account by $250,00, that lost 10% means you’ll only receive $160,000 – 90,000 less than planned.

If you’re approaching retirement or preparing to sell, give me a call and we can discus your options.