Today, almost every realtor in the US is wondering whether the housing market in 2023 will witness any change or not. The industry is hopeful that things will return to normal, just like it was during the pre-pandemic era.
If you’re one such realtor wondering the same thing, this article can bring you to light. Here, you’ll find an in-depth analysis of the projected housing market 2023 and the experts’ views and opinions on this subject matter.
To bring relief for a stress-free read, the US housing market 2023 is full of potential. So, let’s uncover what realtors like yourself can expect from this year’s housing market in detail.
Housing Market Prediction For March 2023
1. Housing Price Inflation Will Return To Normal
Over the past consecutive years, the housing value inflation or growth has remained unfeasible for months. Wondering whether the situation will change this year?
The good news is that housing prices growth/inflation will most likely decrease in 2023. “The US housing market 2023 will only witness a 5% rise in home prices,” says Bank of America. Zillow previously forecasted that in May 2022, the annualized housing price inflation would reach a startling 22% and put things in context.
“After that, this rate will gradually drop all through the following year until it reaches pre-pandemic standards by December 2023,” Zillow predicted in 2022. Given today’s housing market scenario, the prediction seems almost correct, as the market is returning to normal at a slow yet progressive rate.
2. Lending Rates Will Increase
A rigid labor marketplace and scorching wage inflation aren’t a great combo. These circumstances practically assure an increase in lending rates in 2023. The US Federal Reserve recently stated that there would be an 11 times increase in lending rates in 2023. Given the current scenario, the economy will already start decelerating by the time we witness the 11% interest hikes.
Nevertheless, there’s no doubt that at least 50% of these proposed interest rate increases will indeed take place. According to the Mortgage Bankers Association, the interest rates on housing loans will surge to 6% or even more by the end of 2023.
3. There Will Always Be Fragile Global Supply Chain
The US home market has undergone unforeseen repercussions of a fragile or broken global supply chain. Simply put, since real estate developers can’t find the raw materials in time, houses are not being constructed at a rate that keeps up with demand. Given the existing supply chain issues, there are no signs of improvement in the global supply chain this year. Thus, realtors shouldn’t have high hopes for this aspect.
4. Housing Market in 2023 Will Have Less Competition
Fortunately, the housing market in 2023 is facing a low demand for housing. However, this decrease in demand isn’t impactful enough to distort the seller’s market. According to the National Association of Realtors or NAR’s chief executive – Lawrence Yun – the housing market in 2022 and onwards will witness less competition than before.
Well, chances are that you aren’t surprised at all. Simply put, wages don’t keep up with the sky-high real estate prices, which will most likely persist. According to Fannie Mae’s forecast, an average house in the US will cost $395,000 in 2023. Many prospective purchasers will leave the marketplace due to the increasing housing prices and loan rates.
5. Highly-Priced Homes Will Keep Popping Up On The Listings Loan:
Affordability will, yet again, be a crucial issue in the housing market in 2023. As per the report from Mr. Yun, real estate valued at $500,000 or less are hard to find these days, and inventories or availability of homes priced at higher values has increased significantly. If any individual makes a purchase in the housing market in 2023, they may be taking such action, fearing that housing prices and interest rates will surge even higher.
Houses that used to be costly are now next-to-impossible-to-purchase or too expensive for the average public. This is one of the reasons why there’s less competition in the market these days. According to Yun, there are currently more listings for properties valued above $500,000 now than a year ago, which must prompt some purchasers to stop making rushed decisions.