According to the NAR, 2021 saw several real estate records fall, with sales exceeding the targets set in 2020 by $600 million. Last year, home buyers spent over $3 trillion on new homes, but the tide is turning now.
As interest rates climb, the future may hold a different outlook from these recent excesses.
Keep reading for the latest real estate market predictions that may impact you if you’re considering selling or buying a home.
1. Real Estate Market Predictions About Home Prices
For now, home values as still increasing, albeit more slowly. Will this trend continue?
It depends on who you ask. Zillow, CoreLogic, and Fannie Mae predict small increases in home prices nationally, but most industry experts disagree.
Goldman Sacs and Moody’s Analytics predict US home prices will fall between 5% and 10%, Capital Economics expects prices to fall by 8%, and Morgan Stanley anticipates a 7% decline.
Wells Fargo expects a 5% decrease in home prices, Zelman & Associates agree this may happen in 2024, with a 4% decrease during 2023.
According to more specific predictions, the following housing markets will see the biggest decreases in home values:
- Minot, North Dakota
- Fairbanks, Arkansas
- Alexandria, Louisiana
- Helena, Arizona
- Red Bluff, California
From a statewide perspective, areas in Florida, Arizona, North Carolina, Montana, and Tennessee should still see significant price increases during2023.
2. Property Market Predictions About Demand
The last two years saw an unprecedented demand for homes as millennials came of age and interest rates fell to all-time lows.
On top of this, the closure of the construction industry in 2020 along with material shortages led to a decrease in newly built homes. Home construction is back up and running, but it’s two years behind.
The US had a housing shortage before 2020 rolled around, and it’s going to take a long time before this situation changes. Even a significant reduction in demand wouldn’t impact home prices much right now.
3. Real Estate Predictions For Sales
As sales start to slow, the best way to sell your house fast is by accepting an offer from a cash buyer. Regular buyers are hesitant to commit amid these uncertainties.
Homes are still selling, but rising interest rates coupled with low inventory mean sales are down across the board.
4. Real Estate Industry Predictions for Investors
Rent increases of over 17% in some places have finally stabilized, but that doesn’t mean housing will become cheaper. On the contrary, rentals should increase by between 5% and 9% in 2023, depending on where you live.
5. A Buyer’s Market Prevails
All the above factors contribute to the seller’s market holding out for now.
Some forecasters predict that those contemplating buying a home might see things turn in their favor toward the end of 2023.
There are Interesting Times Ahead
We live in unusual times, so it’s not surprising that few experts agree on real estate market predictions. After the anomalies of 2020 and 2021, they don’t have any reliable benchmarks to measure against.
Much depends on whether the anticipated 2023 recession arrives or not, although a recession doesn’t always have a significant impact on real estate.
If you’d like to keep tabs on the latest happenings in the real estate industry, bookmark our site and check back regularly for updates.
