With the recent buzz around home price deceleration, it's essential to know what this term actually means. Deceleration in home prices doesn't indicate a drop; instead, it signifies a slower pace of growth. In this insightful video (embedded below), we'll visually explain the difference between deceleration and depreciation to make this complex subject more accessible.
If you've heard that home prices are decelerating and wondered if that means they're falling, you're not alone. However, deceleration is entirely different from depreciation.
Deceleration is when something continues to move forward but not as quickly as before. Imagine a car speeding along and then starting to slow down. That's deceleration. In the context of home prices, deceleration means they're still rising, just not as fast.
A second concept, depreciation, refers to going in the opposite direction. Like a car that stops and then starts backing up, depreciation indicates a decrease in value. When it comes to real estate, depreciation would mean prices are actually falling.
What the current market demonstrates is a deceleration of appreciation, not depreciation. This nuance is vital for home buyers, sellers, and investors alike to comprehend.
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