Silversons Real Estate Chatter - Your 2-minute take

Market predictions for 2023 are in...

As we head into the end of 2022, coming year predictions are flooding in, and the experts don’t necessarily agree on what’s to come. Many in the housing industry predict lower buyer demand, lower prices, and higher borrowing rates. Others believe that the housing market will continue to outperform compared to before the pandemic. While there is little consensus regarding housing forecasts for 2023, rate increases, along with a shortage of inventory, are both expected to continue.

CoreLogic, Fannie Mae, Freddie Mac, and Zillow all predict that home prices will slightly increase in most housing markets. If inflation persists, the Fed could continue to tighten. This would result in higher mortgage rates, which will impact the U.S. housing market. If inflation falls or a recession develops in the near future, the Fed may soften financial conditions.

While it may sound simple, supply & demand drive the market. Prices drop when demand is met, and increase when supply is plentiful. There has been excessive demand for houses in many popular markets, and there simply aren't enough homes to meet the demand. New home construction was active and growing in recent years, but still not enough to keep up with needs. A drop in housing prices would follow a drop in demand, which is expected to happen due to looming higher interest rates or economic downturn in general. If price growth does slow down in 2023, a drastic fall in home prices is unlikely. A pullback, which is slightly less severe than a fall, is a natural progression in housing market fluctuation. In the United States, housing prices will most likely slow down in 2023, but in our estimation it will be moderate.