US Housing Market Predictions for 2023
As 2022 has almost come to an end, homebuyers, real estate investors, and stakeholders are presuming various thoughts about the real estate scenario of 2023. Some of which are vivid, and some are abstract. Let’s discover the actual projections with the help of statistical data from the market leaders.
2023 Housing Market Forecast
It’s difficult to make specific predictions about the housing market for any given year, as it can be affected by a wide range of factors such as economic conditions, interest rates, and government policies. With that said, here are a few trending questions, we’ll discuss:
1. Will Home Prices Drop in 2023?
Morgan Stanley, the global leader in financial services, assumes about a 10% decline in home prices in the upcoming 2023 and 2024. The effect of current inflation is already causing price drops in some areas and metros- Seattle, San Diego, San Francisco, etc. The number of home sales may reduce to the lowest possible rate with a mid-year recovery. Also, in climate-risky and disaster-prone zones, say beachfront Florida and California’s hilly areas, homes will have a higher insurance cost compared to this year. So, home prices may hike in those areas.
Redfin assumes an average of 4% price drop in housing property in 2023 starting from Q1 at the rate of 2% than the previous year, following 5% in Q2 and Q3, ending at 3% in Q4. But affordability is still a big question due to the current inflation and an upcoming recession. In addition to that, they assume a decline in new inventory listing can result in the total inventory number at a historic low, keeping the situation, not in favor of buyers.
2. How much will the Mortgage rates increase?
Compared to the previous two years, mortgage rates may increase in 2023. It is assumed that the rates will be around 6.1% on average for a fixed 30-year term period. However, the Capital Economics researchers forecasted it might decline to 5.75% as inflation may slow its hike at the end of the year. Clearly, the buyers can’t afford homes at a rate that they could with the same budget as two years back.
A median-income homebuyer legally buying a home at $425,000, had to pay 28.5% of the income in October 2022, which is higher than in May 2020, only 13.3%. The monthly pay rate thus can increase even more. Hopefully, if inflation cools down faster than expected and the job market recovers its stability, the mortgage rates might drop under 6%.
3. Will 2023 Be a Buyer’s Market or a Seller’s Market?
It is a common inquiry among the stakeholders whose favor the market is in the buyer or the seller. While the housing market shall see a drop, demand will remain high due to the lack of new inventory in the market. Following the current market shortage and price drop, the market may remain stable and not be in anyone’s favor.
More importantly, following the unemployment rate hike, lenders will tighten the mortgage terms and conditions. So, home hunters will be required to have a higher credit score and/or lower debt-income ratio to apply for home loans.
4. Which Cities Will Still Hold Up the Market Value Despite the Instability in the Housing Market?
The current housing market is full of uncertainties, making it difficult for many to predict the future. However, despite the instability, there are still cities across the United States that will hold up the market value. These cities have strong economies and a large population of potential buyers and renters to maintain their high prices.
Cities like New York City, Los Angeles, San Francisco, Seattle and Washington D.C., all rank among the top five most expensive places in terms of real estate prices.
These locations are home to some of the most renowned universities and businesses in the country which attract high-income earners who can afford to purchase or rent expensive properties. Additionally, these cities offer great recreational activities that appeal to a wide audience which helps keep demand high for desirable homes.
We also found 3 unique less-popular metro areas that might perform well in upcoming years.
Lake County, Illinois
The Lake County, Illinois housing market has seen a steady growth in recent years, with prices increasing and inventory levels remaining consistent. With the economy continuing to improve into 2023, there are some promising predictions for the county’s real estate outlook.
Analysts have projected that the Lake County housing market will continue on an upward trend in 2023. Home sales are expected to stay high with an increase in buyer demand from those relocating from other areas of Illinois or even other states due to lower tax rates and proximity to Chicago. Additionally, home values are expected to remain strong as new construction continues at a steady pace and interest rates remain low for buyers.
Overall, it appears that 2023 will be a good year for buyers and sellers in the Lake County housing market.
Arrington, Tennessee
The 2023 housing market in Arrington, Tennessee is predicted to be strong and healthy. This prediction is based on the current trends and developments in the area. Average home prices have risen steadily over the past few years, and this trend is expected to continue as demand increases for homes in this desirable part of the state.
As more people move into town, new construction will be needed to meet housing demands. This could include both single-family homes and larger apartment complexes or condos. In addition to increasing housing stock, there are also plans for development of other infrastructure such as schools, parks, shopping centers, etc., which will increase property values even further.
These factors combined with a low unemployment rate and a strong job market make Arrington an attractive option for potential buyers looking for stability and value in their real estate investments.
Milwaukee, Wisconsin
The Milwaukee, Wisconsin housing market is expected to continue its steady growth over the next few years. According to local real estate experts, the demand for housing in the area has been increasing since 2020 and is projected to remain strong through 2023. Market analysts anticipate that single-family homes will be in high demand due to their affordability and close proximity to urban amenities.
In addition, rental properties are anticipated to be popular among millennials and young professionals moving into the city. With businesses expanding throughout downtown Milwaukee, there will be a higher demand for condos and urban apartments due to their convenience. Economic growth in the region is expected to drive property values upwards as more people move into the area looking for affordable housing options with easy access to city attractions like Miller Park, Lake Michigan beaches, and other attractions such as festivals held throughout the year.
Assessing all the market data available, it becomes vividly clear that 2023 is gonna be a booming year for investors and homebuyers as home prices will go down, or at least for the first half.
A shrewd person should miss no chance to invest in housing properties. Even though a higher mortgage rate and beating inflation are quite challenging to make the right investment, some areas are still a good grab for investors and homebuyers.
You May Also Enjoy
Real Estate Lawyers: Who They Are and What They Do?
Weekly News Roundup – 03/05/24
Rightmove’s weekly mortgage tracker – 02/05/24
Powering Up Your Brokerage: How Real Estate Apps are Transforming the Industry
Breaking Property News – 02/05/24