Are Home Prices Going Up or Down in Los Angeles and Beverly Hills, CA? That Depends…

Are Home Prices Going Up or Down in Los Angeles and Beverly Hills, CA? That Depends… | Christophe Choo at Coldwell Banker Global Luxury is Your Local Real Estate Expert

Media coverage about home prices can be perplexing, especially with the various types of data and focal points that are emphasized. When it comes to comparing home prices over different time periods, two distinct methods are commonly used: year-over-year (Y-O-Y) and month-over-month (M-O-M). Let's delve into each of these approaches and shed some light on their significance.

Year-over-Year (Y-O-Y): Y-O-Y comparisons involve measuring the change in home prices from the same month or quarter in the previous year. For instance, if we are comparing Y-O-Y home prices for April 2023, we would examine the home prices for April 2022. This method offers a comprehensive view of long-term trends, enabling us to evaluate annual growth rates and determine whether the market is generally appreciating or depreciating.

Month-over-Month (M-O-M): In contrast, M-O-M comparisons focus on analyzing the change in home prices from one month to the next. For example, if we are comparing M-O-M home prices for April 2023, we would compare them to the home prices for March 2023. This approach provides a more immediate snapshot of short-term movements and price fluctuations, allowing us to track immediate shifts in demand and supply, seasonal trends, or the impact of specific events on the housing market.

The key distinction between Y-O-Y and M-O-M comparisons lies in the time frame under assessment. Both methods offer their own merits and serve different purposes depending on the specific analysis required.

Why Is This Distinction So Important Right Now? As we approach the coming months, it's possible that home prices could be lower than they were during the same months last year. In 2022, April, May, and June witnessed some of the highest home prices in the history of the American housing market. However, this year's figures might not match up to those records. Consequently, the Y-O-Y comparison will likely indicate a depreciation in values, leading to headlines suggesting that home values are falling. While these headlines may be accurate in a Y-O-Y context, they can mislead many consumers into believing that home values are currently cascading downward.

However, upon closer examination of M-O-M home prices, we can observe that prices have actually been appreciating for the last several months. These M-O-M numbers offer a more accurate reflection of what is truly happening with home values. After several months of depreciation, it appears that we have hit bottom and are now bouncing back.

To illustrate this, let's take a look at the M-O-M movements in home prices for the last 16 months, as shown in the CoreLogic Home Price Insights report (see graph below):

[Insert graph showing M-O-M home price movements for the last 16 months, with data from CoreLogic Home Price Insights]

Why Does This Matter to You? It is crucial to keep in mind that negative headlines about home prices may not present the full picture. In the next few months, when comparing prices to last year's record peak, the Y-O-Y comparison may create a more negative perception. However, if we focus on the more immediate M-O-M trends, we can see that home prices are actually on the rise once again.

There is an advantage to purchasing a home now. By buying at this point, you can benefit from a discount compared to last year's prices and position yourself before prices gain even more momentum. This strategy, known as "buying at the bottom," can prove to be advantageous.

Bottom Line If you have any questions regarding the current state of home prices or if you are considering buying a home before prices climb higher, it would be beneficial to connect with us. We can provide you with the information and guidance you need to make informed decisions in this dynamic market.

Call Christophe Choo at (310) 777-6342 to tour your future home "HERE" or click "HERE" to estimate your home value