Economists and other housing experts predict the market will be more balanced among buyers and sellers. Home prices won’t change much while mortgage interest rates will continue to dip
While the slowing housing market has some expecting a crash in 2023, next year will likely be more humdrum, albeit still painful as the market continues to cool before an expected uptick in 2024, according to economic experts across the real estate industry.
In general, experts predict a more balanced market between homebuyers and sellers where home prices will either flatten, dip slightly or rise slightly while mortgage interest rates continue to decrease after a rapid rise this year and inventory bumps up marginally but not enough to make up for affordability challenges.
“The housing market has been running at a frenzied pace for the past two-and-a-half years, but the reckoning is at hand,” said Lisa Sturtevant, chief economist for Bright MLS, in a 2023 U.S. housing market outlook.
“In the second half of 2022, high home prices and fast-rising mortgage rates stalled market activity. As demand dries up and price expectations are re-set, home prices in most local markets will be dropping from their pandemic peaks.”
According to Taylor Marr, deputy chief economist at Redfin, continued high mortgage rates are likely to make the 2023 housing market the slowest since 2011.
“We expect home sales to sink to their lowest level in more than a decade in 2023 as high mortgage rates keep housing costs up and prevent people from moving,” Marr said in a report outlining Redfin’s 2023 predictions.
“High homeowner equity and a resilient job market will stave off a wave of foreclosures.”
Fannie Mae is expecting a “modest recession” in 2023 with a predicted negative 0.5 percent in GDP growth before the economy expands by 2.2 percent in 2024.
“The economy caught its breath in the second half of 2022, but that doesn’t change our expectation that it will run out of air in early 2023 via a mild recession,” said Doug Duncan, senior vice president and chief economist at Fannie Mae in a statement.
“We expect housing to continue to slow, even though mortgage rates have come down recently. Home purchases remain unaffordable for many due to the rapid rise in rates over the last year and the fact that house prices, though certainly slowing and in some places declining, remain elevated compared to pre-pandemic levels.
“Of course, refinancing is still not practical for the vast majority of current mortgage holders, which we expect will also continue to constrain mortgage origination activity.”
Danielle Hale, chief economist for Realtor.com, anticipates that everyone in the housing market — sellers, buyers, and renters — “may be underwhelmed” next year in what she called a “nobody’s-market” friendly to neither buyers nor sellers.
“The slowdown in home sales transactions that began as mortgage rates surged in 2022 is expected to continue, leading to a moderation in home price growth and tipping housing market balance away from sellers,” Hale said.
“But with mortgage rates continuing to climb as the Fed navigates the economy to a soft-ish landing, a moderation in home price growth will not be enough for the housing market to be a buyer’s bonanza. Instead, home shoppers will enjoy advantages such as a growing number of homes for sale, but costs will remain high, challenging affordability at a time when overall budgets continue to be squeezed.”
Here are five economic indicators to keep an eye on next year.
After starting the year at 3.2 percent, the 30-year fixed mortgage rate rose higher than 7 percent in October for the first time in more than two decades but has begun to decline. Experts differed on how much lower they expect the rate to fall in 2023.
Lawrence Yun, chief economist for the National Association of Realtors, expects the rate to settle at 5.7 percent as the Federal Reserve slows the pace of rate hikes to control inflation, lower than the pre-pandemic historical rate of 8 percent, according to an announcement from the 1.6-million-member trade group.
Similarly, Matthew Gardner, chief economist for Windermere, predicts rates will stay above 6 percent until the fall of 2023 and then “dip into the high 5 percent range,” which he noted was “still more than 2 percent lower than the historic average.”
Sturtevant predicted the rate would fall to 6 percent by the end of 2023 — much higher than in recent years but similar to the rate back before the Great Recession.
“Rising mortgage rates have been the main cause of the pullback in sales,” Sturtevant said. “The average rate for a 30-year fixed-rate mortgage will end 2022 around 6.5 percent after surpassing 7 percent earlier this fall. Mortgage rates will fall in 2023, but they will not come down nearly as quickly as they rose. Mortgage rates may have ended their steady upward rise, but expect volatility in rates throughout the rest of the winter before they begin to ease.”
Marr anticipates that the rate will end 2023 at around 5.8 percent, averaging about 6.1 percent for the year. That will make buying a home slightly more affordable than currently, but much less affordable than last year.
“Mortgage rates dipping from around 6.5 percent to 5.8 percent would save a homebuyer purchasing a $400,000 home about $150 on their monthly mortgage payment,” Marr said.
“To look at it another way, a homebuyer on a $2,500 monthly budget can afford a $383,750 home with a 6.5 percent rate; that same buyer could afford a $406,250 home with a 5.8 percent rate. Still, that’s much less affordable than a few years earlier. With a 3 percent rate, which was common in 2020 and 2021, that same buyer could afford a $517,000 home.”
Zillow’s research team predicted the affordability challenges that come with higher rates would mean more buyers will purchase homes with friends and family and more homeowners will become first-time landlords next year as they hold onto investment properties previously bought with record-low mortgage rates.
“A Zillow survey fielded this spring found that among successful recent homebuyers, 18 percent had purchased along with a friend or relative who wasn’t their spouse or partner, and 19 percent of prospective homebuyers intended to buy with a friend or relative in the next 12 months,” Zillow’s research team wrote in a report outlining its 2023 predictions.
“For both groups, affordability and qualifying for a mortgage were cited as the top reasons for buying together — challenges that are now even more acute. Mortgage payments for a typical U.S. home rose from needing 27 percent of median household income in January to 30 percent in March to 37 percent in October – far beyond the 30 percent threshold where housing becomes a financial burden.”
While economists from Zillow and realtor.com predicted that existing-home sales would hit 16-year highs in 2022, sales actually dipped by 16.2 percent year over year, according to Yun. (Yun expected that sales would dip from 6 million in 2021 to 5.9 million in 2022, though sales fell further to 5.13 million). In 2023, Yun anticipates existing-home sales will decline 6.8 percent, to 4.78 million.
Sturtevant expects home sales will be lower in 2023 than in 2022 due to homebuyers purchasing homes earlier than planned when mortgage rates were low and to inventory remaining very low as homeowners decide to sit on lower mortgage rates. Existing-home sales are likely to reach 5.2 million by the end of the year, according to Sturtevant.
“While this is a decline of 15.1 percent from 2021, it is in line with the typical number of annual home sales prior to the pandemic,” she said.
“Overall, our forecasts are for there to be 4.87 million home sales nationally [in 2023], the first time the number of annual sales of existing homes falls below 5 million since 2014. Sales are projected to be down 6.4 percent from 2022 sales.”
Marr anticipates that home sales will fall to their lowest level since 2011 with a slow recovery in the second half of the year.
“We expect about 16% fewer existing home sales in 2023 than 2022, landing at 4.3 million, with would-be buyers pressing pause due mostly to affordability challenges including high mortgage rates, still-high home prices, persistent inflation and a potential recession,” he said.
“People will only move if they need to. That’s fewer home sales than any year since 2011, when the U.S. was reeling from the subprime mortgage crisis, and a 30 percent decline from 2021 during the pandemic homebuying boom.”
Hale predicts 2022 existing-home sales to add up to about 5.3 million, down 13.8 percent from 2021, and to decrease another 14.1 percent in 2023 to 4.5 million.
“The deceleration in home sales is likely to continue as high home prices and mortgage rates limit the pool of eligible home buyers,” she said.
The for-sale housing supply is at historically low levels and likely to remain so even as inventory rises slightly in 2023 and new construction is focused on multifamily rentals, experts predict.
“Although inventory levels rose in 2022, they are still well below their long-term average,” Gardner said.
“In 2023, I don’t expect a significant increase in the number of homes for sale, as many homeowners do not want to lose their low mortgage rate. In fact, I estimate that 25 million to 30 million homeowners have mortgage rates around 3 percent or lower.
“Of course, homes will be listed for sale for the usual reasons of career changes, death and divorce, but the 2023 market will not have the normal turnover in housing that we have seen in recent years.”
Gardner does not expect a buyer’s market in 2023 but does expect a more balanced one.
“A buyer’s market is usually defined as having more than six months of available inventory, and the last time we reached that level was in 2012 when we were recovering from the housing bubble,” he said.
“To get to six months of inventory, we would have to reach 2 million listings, which hasn’t happened since 2015. In addition, monthly sales would have to drop to below 325,000, a number we haven’t seen in over a decade.”
Hale predicts that inventory levels will continue to grow gradually — by 4 percent in 202 and by 22.8 percent in 2023 — as the turnover of homes slows. That still puts inventory lower than in 2019.
“The level of inventory in 2023 is expected to fall roughly 15 percent short of the 2019 average,” Hale said. “In fact October 2022 was the first time that inventory climbed back to its 2020 level for the same time of year.”
Marr anticipates that building permits and housing starts will drop about 25 percent annually in 2023 with most of the pullback in single-family homes.
“Construction of single-family homes surged during the pandemic, which means builders need to offload the homes they have on hand without adding more supply to limit their financial losses,” Marr said.
“They’ll pull back dramatically in some markets like Phoenix and Dallas, where they built too many homes in anticipation of demand that’s failing to materialize.”
While he expects that rental building activity will fall slightly next year, he doesn’t expect it to fall as much as the construction of single-family homes.
“Constructing rental units, including apartment buildings and multifamily houses, will make more financial sense for builders next year, as rental demand won’t fall off as much,” he said.
“Some construction spending will shift to remodels, as many Americans hoping to move will instead opt to renovate in the face of high mortgage rates.”
After rising by double-digits in 2021 — 16.9 percent, according to Yun — home prices nationwide are expected to end 2022 nearly 10 percent higher. Yun predicts a 9.6 percent jump this year while Sturtevant predicts a 9.5 percent jump. Experts’ forecasts on prices in 2023 vary from those thinking prices will remain flat to those expecting single-digit rises or dips.
“Home prices will be relatively stable in 2023, with the median price rising by just 0.3 percent,” Sturtevant said. “Stable prices nationally will be supported by relatively low inventory in 2023.”
Yun also expects median home prices to rise 0.3 percent to $385,800.
“The probability of a price crash is essentially very small given the lack of supply,” he said during a forecast webinar earlier this month.
“Half of the country may experience small price gains, while the other half may see slight price declines,” Yun added. “However, markets in California may be the exception, with San Francisco, for example, likely to register price drops of 10–15 percent.”
At the same time, Hale anticipates home prices to continue to grow, though at a slower pace than in recent years, further eroding home affordability.
“Soaring prices were propelled by all-time low mortgage rates which are a thing of the past,” Hale said. “As a result, home price growth is expected to continue slowing, dipping below its pre-pandemic average to 5.4 percent for 2023, as a whole.
“As higher mortgage rates cut into homebuyer purchasing power, the monthly cost of financing the typical for-sale home will average more than $2,430 in 2023. This would be a nearly 28 percent increase over the mortgage payment in 2022, and roughly double the typical payment for buyers in 2021.”
Meanwhile, Marr predicts that home prices will post their first year-over-year decline in a decade in 2023, dropping about 4 percent to $368,000.
“That’s due to elevated rates and final sale prices starting to reflect homes that went under contract in late 2022,” he said.
“Prices would fall more if not for a lack of homes for sale: We expect new listings to continue declining through most of next year, keeping total inventory near historic lows and preventing prices from plummeting.”
Still, the country will avoid a wave of foreclosures, according to Marr.
“Very few homeowners are likely to see their mortgages fall underwater even with next year’s anticipated price declines,” he said.
“That’s because the homeowners who’ve had their home for at least a few years have fixed low mortgage payments and plentiful home equity after values skyrocketed during the pandemic. Even those who bought recently near the height of the market are likely to have made a sizable down payment and therefore have some equity to land on.
“Importantly, the jobs market remains resilient; even if there is a recession, economists expect a mild one with a small increase in unemployment, so it’s unlikely that many homeowners will fall behind on their mortgage payments.”
In response to some predictions that the market will crash next year because it’s in a bubble, Gardner was blunt: “There is no housing bubble.”
“Over the past couple of years, home prices got ahead of themselves due to a perfect storm of massive pandemic-induced demand and historically low mortgage rates,” he said.
“While I expect year-over-year price declines in 2023, I don’t believe there will be a systemic drop in home values. Furthermore, as financing costs start to pull back in 2023, I expect that will allow prices to resume their long-term average pace of growth.”
Gardner expects that affordability will continue to be a major problem for homebuyers due to relatively high mortgage rates, though Zillow’s research team expects affordability to stabilize, if not improve, in 2023.
“Zillow expects national home values to remain relatively flat next year, and even fall in the most affordability-challenged markets,” the research team said.
“Mortgage rates, highly impactful to the mortgage payment, are seeing some recent and encouraging progress downwards as inflation and labor market tightness show small signs of easing, enough to lead some to suggest the Federal Reserve may ease its aggressive monetary contraction. If we’ve actually turned the corner on inflation, that should continue.”
While home prices are not expected to change much overall next year, individual markets may fair differently. Experts generally predicted that relatively affordable Midwestern markets are likely to be strongest next year.
“Unlike nearly every other region in the United States, prices in most Midwest metro areas haven’t run up to extremes,” Zillow’s research team said.
“Mortgage costs as a share of income are still within healthy, sub-30 percent levels across Ohio, Pennsylvania, Kansas, upstate New York, Iowa and smaller metros in Illinois, which will allow first-time buyers to take the plunge. Lower rents and home prices in these areas make it easier to save up for a down payment.
“Having available houses to choose from is another key component of a healthy market, and the Midwest stands out — inventory isn’t in a massive hole compared to pre-pandemic times, and declines in new listings are smaller than the national average, encouraged by the more consistent demand from buyers.”
Meanwhile, markets with big run-ups in prices during the pandemic are likely to see the steepest declines, according to economists.
“Nationally, the median home price increased by an average of 10 percent annually between 2019 and 2022,” Sturtevant said.
“As remarkable as the national price growth has been, there are some metro areas where median asking prices grew even faster. These markets are among those at greatest risk of a significant price correction. Metro areas with the fastest three-year price appreciation include Austin (+53 percent), Tampa (+52 percent), and Miami (+50 percent).”
Bright’s forecast predicts that metro areas where price appreciation increased the fastest, where inventory has increased quickly, where sellers are dropping list prices, where affordability is a bigger challenge and where the labor market is weaker are likely to see significant price declines. The MLS singled out these metros in particular as fitting this criteria: Las Vegas, Nevada; Riverside-San Bernardino, California; Phoenix, Arizona; Austin, Texas; and Los Angeles, California.
For similar reasons, Redfin expects these markets to hold up best in 2023:
“Measures of homebuyer demand and competition in these metros are nearly as strong as they were in the beginning of 2022,” Marr said.
“On the other end of the spectrum, we expect prices to fall most in pandemic migration hotspots like Austin, Boise and Phoenix, largely because the huge increases over the last two years leave a lot of room for prices to decline.
“Expensive West Coast cities are also likely to see outsized price declines because of stumbling tech stocks and the shift to remote work pushing so many people out of those markets.”
Gardner agreed that markets where home price growth rose the fastest recently will likely see the biggest price declines, but that “even those markets will start to see prices stabilize by the end of 2023 and resume a more reasonable pace of price growth.”
*Inman, 12/28/22, Andrea V. Brambila.
Sales slowed throughout Loudoun County in November.
In the county’s housing market, there were 329 sales in the month of November, down 48% or 304 fewer sales than the previous year. The number of sales has dropped off in each of the local markets. The biggest decline in sales happened in Ashburn zip code 20147 which had 60 fewer sales compared to last year (-60.6%) and Chantilly zip code 20152 with 36 fewer sales than last year (-67.9%).
Pending sales are down from last year in Loudoun County.
In November, there were 288 pending sales in the county, 179 fewer pending sales than a year ago, which is a 38.3% decrease. The number of pending sales fell the most in Ashburn zip code 20147 with 32 fewer pending sales than a year ago (-41.6%) followed by Sterling zip code 20164 with 28 fewer pending sales than the previous year (-49.1%).
Home prices continue to climb in the county’s housing market.
The median sales price in Loudoun County was $637,500 in November, a price increase of $37,550 compared to the same time last year (+6.3%). The biggest price jump took place in Leesburg zip code 20175, with the median sales price rising by $238,725, a 42.9% increase. The median price also grew in Lovettsville zip code 20180 (+21.1%) and Aldie zip code 20105 (+18.9%). The sales price in Chantilly zip code 20152 fell by double digits this month, with home prices down $72,000 (-10.3%).
Inventory is on the rise as active listings continue to grow.
There were 504 active listings in the Loudoun County market at the end of November, up 88.8% which is 237 more listings than a year ago. The largest increase in listings this month was in Sterling zip code 20164 with 53 more active listings than last November (+331.3%) and Leesburg zip code 20176 which had 51 additional listings (+268.4%).
Data Note: The housing market data for all jurisdictions in Virginia was re-benchmarked in November 2021. Please note that Market Indicator Reports released prior to November 2021 were produced using the prior data vintage and may not tie to reports that use the current data set for some metrics. We recommend using the current reports for historical comparative analysis.
*Provided by DAAR, Dulles Area Association of Realtors
There’s no denying the long-term financial benefits of owning a home, but today’s housing market may have you wondering if now’s still the time to buy. While the financial aspects of buying a home are important, the non-financial and emotional reasons are too.
Home means something different to all of us. Whether it’s sharing memories with loved ones at the kitchen table or settling in to read a book in a favorite chair, the emotional connections to our homes can be just as important as the financial ones. Here are some of the things that make a house a home.
1. You Can Be Proud of Your Accomplishment
Buying a home is a major life milestone. Whether you’re setting out to buy your first home or your fifth, congratulations will be in order when you’ve achieved your goal. The sense of accomplishment you’ll feel at the end of your journey will truly make your home feel like a special place.
2. You Have Your Own Designated Happy Place
Owning your own home offers not only safety and security, but also a comfortable place where you can relax and unwind after a long day. Sometimes that’s just what you need to feel recharged and content.
3. You Can Find the Space To Meet Your Needs
Whether you want more room for your changing lifestyle (like retirement, dedicated space for a hobby, or a personal gym) or you simply prefer to have a large backyard for entertaining, you can invest in a home that truly works for your evolving needs.
4. You Can Customize Your Surroundings
Looking to try one of those decorative wall treatments you saw online? Tired of paying an additional pet deposit for your apartment building? Or maybe you want to create an in-home yoga studio. You can do all these things in your own home.
Whether you’re planning to purchase your first home or you’re ready to buy a different home to meet your needs, consider the emotional benefits that can turn a house into a happy home. When you’re ready to make a move, let’s connect.
The 2022 housing market has been defined by two key things: inflation and rapidly rising mortgage rates. And in many ways, it’s put the market into a reset position.
As the Federal Reserve (the Fed) made moves this year to try to lower inflation, mortgage rates more than doubled – something that’s never happened before in a calendar year. This had a cascading impact on buyer activity, the balance between supply and demand, and ultimately home prices. And as all those things changed, some buyers and sellers put their plans on hold and decided to wait until the market felt a bit more predictable.
But what does that mean for next year? What everyone really wants is more stability in the market in 2023. For that to happen we’ll need to see the Fed bring inflation down even more and keep it there. Here’s what housing market experts say we can expect next year.
Moving forward, experts agree it’s still going to be all about inflation. If inflation is high, mortgage rates will be as well. But if inflation continues to fall, mortgage rates will likely respond. While there may be early signs inflation is easing as we round out this year, we’re not out of the woods just yet. Inflation is still something to watch in 2023.
Right now, experts are factoring all of this into their mortgage rate forecasts for next year. And if we average those forecasts together, experts say we can expect rates to stabilize a bit more in 2023. Whether that’s between 5.5% and 6.5%, it’s hard for experts to say exactly where they’ll land. But based on the average of their projections, a more predictable rate is likely ahead (see chart below):
That means, we’ll start the year out about where we are right now. But we could see rates tick down if inflation continues to drop. As Greg McBride, Chief Financial Analyst at Bankrate, explains:
“. . . mortgage rates could pull back meaningfully next year if inflation pressures ease.”
In the meantime, expect some volatility as rates will likely fluctuate in the weeks ahead. If we see inflation come back under control, that would be good news for the housing market.
Homes prices will always be defined by supply and demand. The more buyers and fewer homes there are on the market, the more home prices will rise. And that’s exactly what we saw during the pandemic.
But this year, things changed. We’ve seen home prices moderate and housing supply grow as buyer demand pulled back due to higher mortgage rates. The level of moderation has varied by local area – with the biggest changes happening in overheated markets. But do experts think that will continue?
The graph below shows the latest home price forecasts for 2023. As the different colored bars indicate, some experts are saying home prices will appreciate next year, and others are saying home prices will come down. But again, if we take the average of all the forecasts (shown in green), we can get a feel for what 2023 may hold.
The truth is probably somewhere in the middle. That means nationally, we’ll likely see relatively flat or neutral appreciation in 2023. As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says:
“After a big boom over the past two years, there will essentially be no change nationally . . . Half of the country may experience small price gains, while the other half may see slight price declines.”
The 2023 housing market is going to be defined by mortgage rates, and rates will be determined by what happens with inflation. The best way to keep a pulse on what experts are projecting for next year is to lean on a trusted real estate advisor. Let’s connect.
WASHINGTON (December 13, 2022) – Lawrence Yun, National Association of Realtors (NAR) chief economist and senior vice president of research, forecasts that 4.78 million existing homes will be sold, prices will remain stable, and Atlanta will be the top real estate market to watch in 2023 and beyond. Yun unveiled the association’s forecast today during NAR’s fourth annual year-end Real Estate Forecast Summit.
Yun predicts home sales will decline by 6.8% compared to 2022 (5.13 million) and the median home price will reach $385,800 – an increase of just 0.3% from this year ($384,500).
“Half of the country may experience small price gains, while the other half may see slight price declines,” Yun said. “However, markets in California may be the exception, with San Francisco, for example, likely to register price drops of 10–15%.”
Yun expects rent prices to rise 5% in 2023, following a 7% increase in 2022. He predicts foreclosure rates will remain at historically low levels in 2023, comprising less than 1% of all mortgages.
Yun forecasts U.S. GDP will grow by 1.3%, roughly half the typical historical pace of 2.5%. After eclipsing 7% in late 2022, he expects the 30-year fixed mortgage rate to settle at 5.7% as the Fed slows the pace of rate hikes to control inflation. Yun noted this is lower than the pre-pandemic historical rate of 8%.
NAR identified 10 real estate markets that it expects to outperform other metro areas in 2023. In order the markets are as follows:
“The demand for housing continues to outpace supply,” Yun said. “The economic conditions in place in the top 10 U.S. markets, all of which are located in the South, provide the support for home prices to climb by at least 5% in 2023.”
NAR selected the top 10 real estate markets to watch in 2023 based on how they compared to the national average on the following economic indicators: 1) better housing affordability; 2) greater numbers of renters who can afford to buy a median-priced home; 3) stronger job growth; 4) faster growth of information industry jobs; 5) higher shares of the information industry in the respective local GDPs; 6) migration gains; 7) shares of workers teleworking; 8) faster population growth; 9) faster growth of active housing inventory; and 10) smaller housing shortages.
To view NAR’s On the Horizon: Markets to Watch in 2023 and Beyond report, visit this page.
The National Association of Realtors® is America’s largest trade association, representing more than 1.5 million members involved in all aspects of the residential and commercial real estate industries.
*originally posted on RETechnology 12/15/22
If you’re trying to decide whether or not to sell your house, recent headlines about home prices may be top of mind. And if those stories have you wondering what that means for your home’s value, here’s what you really need to know.
It’s possible you’ve seen news stories mentioning a drop in home values or home price depreciation, but it’s important to remember those headlines are designed to make a big impression in just a few words. But what headlines aren’t always great at is painting the full picture.
While home prices are down slightly month-over-month in some markets, it’s also true that home values are up nationally on a year-over-year basis. The graph below uses the latest data from S&P Case-Shiller to help tell the story of what’s actually happening in the housing market today:
As the graph shows, it’s true home price growth has moderated in recent months (shown in green) as buyer demand has pulled back in response to higher mortgage rates. This is what the headlines are drawing attention to today.
But what’s important to notice is the bigger, longer-term picture. While home price growth is moderating month-over-month, the percent of appreciation year-over-year is still well above the home price change we saw during more normal years in the market.
The bars for January 2019 through mid-2020 show home price appreciation around 3-4% a year was more typical (see bars for January 2019 through mid-2020). But even the latest data for this year shows prices have still climbed by roughly 10% over last year.
While you may not be able to capitalize on the 20% appreciation we saw in early 2022, in most markets your home’s value, on average, is up 10% over last year – and a 10% gain is still dramatic compared to a more normal level of appreciation (3-4%).
The big takeaway? Don’t let the headlines get in the way of your plans to sell. Over the past two years alone, you’ve likely gained a substantial amount of equity in your home as home prices climbed. Even though home price moderation will vary by market moving forward, you can still use the boost your equity got to help power your move.
As Mark Fleming, Chief Economist at First American, says:
“Potential home sellers gained significant amounts of equity over the pandemic, so even as affordability-constrained buyer demand spurs price declines in some markets, potential sellers are unlikely to lose all that they have gained.”
If you have questions about home prices or how much equity you have in your current home, let’s connect so you have an expert’s advice.
At first glance, the increase in housing supply compared to last year may not sound like good news for prospective sellers, but it actually gives you two key opportunities in today’s housing market.
An article from Calculated Risk helps put the inventory gains the market has seen in 2022 into perspective by comparing it to recent years (see graph below). It shows supply has surpassed 2021 levels by 58%. But the further back you look, the more you’ll understand the bigger picture. And if you go all the way back to 2019, the last normal year in real estate, we’re roughly 35% below the housing supply we had at that time.
If your current house no longer meets your needs or lacks the space and features you want, this inventory growth gives you even more opportunity to sell and move into the home of your dreams. With more houses on the market, you’ll have more to choose from when you search for your next home.
Partnering with a local real estate professional can help you make sure you’re up to date on the homes available in your area. And when you do find the one, a professional can advise you on how to write a winning offer.
But again, despite the growth, inventory is still low compared to more normal years, and that isn’t going to change overnight. For you, that means your house should still be in demand among potential buyers if you price it right.
As an article from realtor.com says:
“Today’s shoppers generally have more homes to consider than last year’s shoppers did, but the market is still not back to pre-pandemic inventory levels.”
If you’re a homeowner looking to sell, you have more homes to choose from and can still sell your house while inventory is low overall. Let’s connect to get started, so you can have the best of both worlds.
If you’re thinking about buying or selling a home this year, you may have questions about what’s happening with home prices today as the market cools. In the simplest sense, nationally, experts don’t expect prices to come crashing down, but the level of home price moderation will depend on factors like supply and demand in each local market.
That means, moving forward, home price appreciation will continue to vary by location, with more significant changes happening in overheated areas. Here’s a quick snapshot of what the experts are saying:
Danielle Hale, Chief Economist at realtor.com, says:
“The major question on the minds of homeowners and aspiring buyers alike is what will happen to home prices. . . Soaring prices were propelled by all-time low mortgage rates which are a thing of the past. As a result, home price growth is expected to continue slowing, dipping below its pre-pandemic average to 5.4% for 2023, as a whole.”
Mark Fleming, Chief Economist at First American, says:
“House price appreciation has slowed in all 50 markets we track, but the deceleration is generally more dramatic in areas that experienced the strongest peak appreciation rates.”
Taylor Marr, Deputy Chief Economist at Redfin, says:
“For those bearish folks eagerly awaiting the home price crash, you’ll have to keep waiting. As much as demand is pulling back supply is as well reducing downward pressure on prices in the short run.”
John Paulson, Founder of Paulson & Co., says:
“It’s true – housing may be a little frothy. So housing prices may come down or they may plateau . . .”
The best way to get the answers you need is to lean on a local real estate advisor. They’ll be able to explain the latest trends in your specific market so you can make a confident and informed decision on your next step toward buying or selling a home.
If you have questions about what’s happening with home prices today, let’s connect so you have the latest on our local market.
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