Whether you’re buying, selling, or staying put, you might be feeling unsure about whether a change in home prices will impact your housing plans this year—especially after everything that happened in 2020. Shudder. We get it.
The cool thing is, home prices haven’t been dropping—a relief for sellers. They haven’t been shooting up like a bottle rocket either, which keeps buyers from getting overwhelmed by sticker shock.
Sure, keeping an eye on home prices can give you an idea of what to expect if you plan to buy or sell a house any time soon. But making a decision based on a single trend is almost the same as making one based on a fortune cookie—As the sun will rise, so shall your home plans. What? Exactly.
So just be careful not to let data dictate your housing decisions—only your personal situation and finances should do that. With that said, let’s unpack the latest housing price trends.
Ready. Set. Go!
What’s the Average Price of a House?
Leading up to 2021, the U.S. median home price was $340,000.1 Keep in mind, the median price is a benchmark that tells us half sold for more and half sold for less than that amount. Median prices are usually a better way to look at housing price trends (unless you’re buying a mansion on a private island) because average prices can be super exaggerated by a small share of high-end transactions.
To be clear, that $340,000 median represents both newly built and existing homes. But even if we take those sparkly new homes out of the equation, median prices for just existing homes were also well within that $300,000 range—a nearly 15% growth compared to 2019.2
Also good to know: Home prices have experienced a trend of nonstop growth for nearly a decade!3 And while price growth could slow down if inventory increases, right now it’ll probably continue because too many buyers are competing for homes in a market with record low inventory.4
Home prices have experienced a trend of nonstop growth for nearly a decade! And while price growth could slow down if inventory increases, right now it’ll probably continue because too many buyers are competing for homes in a market with record low inventory.
What Will Happen to Home Prices in 2021?
Overall, experts expect home prices to grow by 8% in 2021—and by 5.5% in 2022.5 So, if you’re thinking of selling, odds are you’ll still make a pretty penny. But if you’re waiting to sell because you think your home will double in value soon, don’t count on it.
On the flip side, if you’re looking to buy, with the growth rate cooling down and the market evening out, there’s less likelihood that prices will shoot up like crazy from year to year.
Overall, experts expect home prices to grow by 8% in 2021—and by 5.5% in 2022.
Recent Home Price Trends
Okay, if you listen to any expert blab about real estate for long enough, you’ll learn that location is important. So, let’s see how current existing home prices change when we look at median prices based on region.
By Region
| Region | Home Price | Versus Last Year |
| West | $468,000 | Up 14% |
| Northeast | $354,000 | Up 17% |
| South | $270,000 | Up 15% |
| Midwest | $239,000 | Up 15%6 |
Home prices definitely vary widely based on your part of the country. Homes in the Midwest were the least expensive, while those on the West Coast sold for the highest prices—something to think about before you drop everything to start an acting career in L.A.
By Age of Home
Unsurprisingly, another factor that dramatically impacts home price is whether you decide to purchase a newly built home or a previously owned one.
In 2020, the median price for a new home was $334,000, while a previously owned home was $260,000.7 So, if you’re thinking, I want a home that’s brand-spankin’ new. Just make sure the extra $74,000 for a new home works with your budget.
Most buyers don’t seem to mind living in a previously owned home if it means paying a lower price. In fact, the majority (85%) of the homes purchased last year were previously owned.8
In 2020, the median price for a new home was $334,000, while a previously owned home was $260,000.
By Buyer Status
It’s also interesting to know first-time homebuyers typically purchased homes that were $230,000, while repeat buyers bought $297,000 homes.9 And whether you’re married or single obviously has an influence on the price of the home you buy as well. Take a look:
| Buyer Status | Home Price |
| Married couples | $305,000 |
| Single males | $234,000 |
| Single females | $210,00010 |
By Size
How does size affect the price? Last year, the median price per square foot was $140.11, And if you’re wondering what the neighbors are doing, most people purchased homes that were 1,900 square feet with three bedrooms and two bathrooms.
What Do Today’s Home Prices Mean for You?
Okay, now we know how prices change based on different factors. But what does that all mean for you?
For Buyers
Well, if you’re planning on buying a house, home prices might look intimidating. But remember, just because you saw house prices that other people in the nation are paying, that doesn’t mean you should look for a house in that price range.
Instead, focus on your own budget. Don’t worry about the pricing trends. A good real estate agent can help you find a home you love that’s within your budget.
If you’re not paying in cash, make sure you get a 15-year fixed-rate mortgage. And whatever you do, never buy a home that’ll cost you more than 25% of your take-home pay in monthly housing payments (including taxes, insurance, and homeowners association fees).
Use our mortgage calculator to test out different home prices and see how much house you can afford.
Never buy a home that’ll cost you more than 25% of your take-home pay in monthly housing payments (including taxes, insurance and homeowners association fees).
For Sellers
When it comes to home prices for sellers, the main question is: How much money can I make on my home sale? Of course, the answer depends on a huge variety of factors. But for a ballpark, recent sellers sold their homes for a median of $66,000 more than they purchased it.12 Cha-ching!
To make sure you get what your home is worth, work with a real estate agent who’s experienced in your area. They’ll be able to do a competitive market analysis to find out what similar homes are selling for in your area so you can price your home right the first time.
For Homeowners
Now, maybe you own a home but you aren’t planning on selling it any time soon. You’re probably curious to know how much your home value is growing or appreciating. Well, get this: People who owned their homes for 4–15 years sold them last year for around $50,000–80,000 more than they purchased them—that’s right, tens of thousands of dollars in growth!13
And those who lived in their homes for 16–20 years before selling earned a median of $85,000—and an average profit of almost 50%!14
So, if you’re thinking about downsizing in the next year or two or planning to buy that retirement dream home, you may be in good shape. And even if you’re not, it’s likely that your home sweet home is going up in value.
How to Buy or Sell a Home for the Best Price
Having an experienced real estate agent is hands down the key to buying or selling a home for the best price. You’ll benefit by working with a professional who knows the ropes and can help you keep costs down or get you the value you deserve for your home.
For a quick and easy way to find the best-performing agents in your market, try our Endorsed Local Providers (ELP) program. The real estate agents we recommend always put your needs first and actually care about helping you keep your financial goals in balance.
Source: daveramsey.com ~ Image: canva.com