As the housing market experiences a shift from a seller’s market to more balanced conditions, experts have differing predictions for 2023. What can we expect in terms of home sales, prices, and market trends?
The real estate market in 2023 remains uncertain, with experts differing in their predictions for the year ahead.
While some predict a decline in the market, others believe that the market will continue to grow.
In this article, we will examine the predictions and trends of the real estate market in 2023 and what factors are expected to influence the market.
Foreclosure Rates Remain Low
Foreclosure rates remained near record lows throughout most of 2022, with a low of 0.2% in February and remaining at 0.3% through October. The reason for this is that 99% of borrowers have locked in low mortgage rates that helps prevent them from making late payments or defaulting on their mortgage.
Differing Predictions
The predictions for 2023 vary, with some firms having a bullish outlook while others are relatively bearish.
Zillow, for example, predicts that U.S. home values will fall just 1.1% between November 2022 and November 2023.
Meanwhile, Moody’s Analytics predicts a 5.1% decrease in national home prices between the fourth quarter of 2022 and the fourth quarter of 2023.
Market Trends
According to the latest report published by Fortune, the ongoing home price correction has been moderate, with U.S. home prices decreasing 2.4% between June and October.
However, economists and experts disagree on whether this is a modest setback for home price increases or the start of a sharper correction.
Zillow expects 658 markets to see falling home prices between November 2022 and November 2023, including San Jose CA, Grand Forks ND, Odessa TX, San Francisco CA, and Santa Rosa CA, Austin TX.
Meanwhile, Zillow predicts that 239 markets will see positive or flat home price growth, including Atlantic City NJ, Homosassa Springs FL, and Yuma AZ.
Moody’s Analytics predicts that 178 markets will see at least a 5% decline in home prices between the fourth quarter of 2022 and the fourth quarter of 2023, including Morristown TN, Pocatello ID, Muskegon MI, Boise ID, and Santa Cruz CA.
Factors Influencing the Market
Low inventories will prevent home prices from declining a lot. Strong job growth, and tight supply will cause unequal price movements.
Lower price tiers are more susceptible to interest rate hikes, while higher price tiers are more resistant to price decreases.
The mix of homes that sell may be smaller on average as the market reacts to increasing mortgage rates and decreased affordability.
Conclusion
In conclusion, the future of the real estate market in 2023 remains uncertain, with varying predictions from experts and firms. However, low foreclosure rates and strong job growth are expected to prevent home prices from declining. The results may vary significantly in regional housing markets and each neighborhood, so it is important to keep an eye on local trends and conditions. Nevertheless, the real estate market is expected to have a moderate correction in 2023, with some moderation brought about by growing salaries and some by declining home prices.
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