Case-shiller released their December 2024 index and the results show a continued, steady increase in home prices year over year and month over month. Home price increases are driven largely by a lack of inventory in many US markets with steady demand for housing. Increases are being somewhat reigned in by affordability challenges resulting from price growth and stubbornly high interest rates.

Month over month, home values ticked up .5%, a nice increase above September-November levels. Year over year, home values are up 3.9%, outpacing inflation and showing healthy appreciation. For a $500,000, that’s a nearly $20,000 increase, showing home ownership continuing to be a sound investment despite affordability challenges resulting from increased interest rates.

It’s important to note that Case-Shiller includes all real estate transactions, including cash offers, because the appreciation levels typically lag behind other home value indexes, largely due to the “discount” that cash offers see on home sales. FHFA, on the other hand, typically shows a somewhat higher figure as the data is reported only on real estate transactions involving conventional financing.

While the north-of-10% yearly appreciation days of 2021 are well in the rear view mirror, values continue to climb in most markets. In some markets, however, inventory levels have spiked and we’re beginning to see a buyer’s market, or at least a market where buyers have more options in terms of price reductions or seller concessions. Because these markets exist within a national market that is still very tight on inventory, it’s important to work with professionals (real estate and mortgage) that understand your market and can discuss the specific area you’re considering buying or where you own your home.

We forecasted a 4%+ appreciation gain in 2025 and so far our forecast numbers are off to a good start. So long as home appreciation outpaces inflation, appreciation + amortization + tax write offs associated with a mortgage and home ownership make owning a property a sound investment in addition to financial and social stability.