How much are home prices expected to rise?

John Duffy puts up a for-sale sign at one of his listings in Narberth. TOM GRALISH / Staff Photographer

Homeowners encouraged by the recent boost in home appreciation witnessed across many markets in 2013 may be discouraged to learn that national home prices are expected to rise only 3 to 5 percent annually, according to a new report published by Clear Capital.

The report from the Truckee, Calif., real estate analytics firm, indicates the national market has at last rebounded from the burst housing bubble, as evidenced by home prices rising within 2 percent of their inflation-adjusted long-run average levels. However, given the current quarterly rate of national growth — 1.2 percent — peak home prices won’t be reached until 2021, per the report.

“The major finding of this report is that the days of arbitrary increases in the real estate market are gone,” says Sissy Lappin, principal of Lappin Properties in Houston. “The real estate market has made a remarkable shift from what we term an ‘inefficient’ market to the current ‘efficient’ market. I agree with the report’s findings, and I believe we are going to have a much more stabilized housing market because real estate is going through a positive paradigm shift.”

Christian Ross, a Realtor with Keller Williams Realty in Atlanta, says homeowners today should expect a slow uptick of appreciation and housing values in a general sense.

“If you’re in a coveted school district, neighborhood or mixed-use area, [appreciation] has the potential to be higher,” Ross says. “In some instances, home values will rise at a higher rate, as supply and demand bows for the desired locations and amenities in a particular market. But all signs point at our return to a stable state.

“The expectation and mindset of a homebuyer should not only be focused on the monetary investment but on the lifestyle homeownership affords,” Ross adds.

Despite the report’s predictions that home prices may not increase as highly in the coming years as many people would like, Lappin says consumers are benefitting from improved technology and online resources that make it easier than ever to determine a home’s true value.

“This has largely eliminated the huge, arbitrary increases in home values that were common during the inefficient market days,” Lappin says.

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