What are the Experts Top 3 Housing Market Predictions for 2023
Guest Author: Sana Ahmad - Connect with me @ HomesBySana.com
The last three years have been a blur, with the housing market swinging from scorching hot to icy cold in the blink of an eye. So, what will the housing market bring us next year? Will the rate of inflation continue to fall? Will there be a recession, or will the Federal Reserve provide a "soft landing"?
These are the questions experts considered when making their predictions for 2023. Everyone was optimistic that, despite an economic downturn, we would be able to avoid a deep recession. And, while the overall picture is not rosy, it does indicate a much calmer housing mareket.
With that backdrop, here are the Top 3 Housing Predictions that experts are making for 2023.
1. Mortgage rates are expected to fall:
Mortgage rates are expected to stay relatively high for the first few months of the year, then decline and stabilize, with rates falling below 6% by the end of the year, according to experts. Lawrence Yun, chief economist of NAR, suggests that the 30-year mortgage rate will conclude 2023 at roughly 5.5%.
Skylar Olsen, chief economist at listing site Zillow, attributes reduced interest rates to lowering rent costs, a significant component of the Consumer Price Index. As these reductions make their way into inflation estimates, Olsen believes the Fed will be more cautious in raising short-term interest rates in the future.
Read: [Guest Post] How the Fed Rate Hikes Provide the Best Opportunity for the Housing Market
2. Inventory will be scarce:
According to the NAR, there is currently an equivalent of 3.3 months' supply of existing homes for sale. In 2023, inventory is predicted to rise by approximately 23%. This is mostly attributable to slower house sales rather than sellers bringing fresh properties to the market. According to Olsen, the average time on the market will double from 11 days in 2022 to 22 days next year, allowing housing supply to increase.
Even when supply improves, the number of available homes will remain below pre-pandemic levels. Though it may appear that there are more homes for sale, inventory will remain limited. “The last few years [we’ve] ping-ponged between a really aggressive market and a cooling market,” says Taylor Marr, deputy chief economist at Redfin. “With more economic stability, that really could bring more overall balance to the market.”
3. Prices for homes will level out:
Both Marr and Olsen expect prices to fall in 2023. Marr predicts a 4% drop in median home prices compared to 2022, while Olsen predicts a more moderate 0.5% drop.
Danielle Hale, chief economist at Realtor.com, on the other hand, feels that low inventory will keep home values from sliding too far. She expects prices to rise somewhat in the first few months of the year before leveling out or declining around mid-year, with the year ending up 5.4% higher altogether. “Even though we’ve seen a pullback in demand, we’ve seen a very similar sized pullback in supply,” says Hale.
It takes an expert to navigate all these fluctuations in the market and as a licensed realtor, I have and continue to find the best and right options for all my client. Please connect with me at HomesBySana.com, for all your real estate needs. Looking forward to many happy clients in 2023!
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