What will the 2023 housing market look like? That is what potential home buyers and sellers most want to know. The consensus is that the housing market will continue to be plagued with inflation, fear of recession, and higher mortgage rates that don’t balance out with the cost of homes. However, housing prices in the U.S. are expected to fall this year, and things will slowly but surely improve.
Expert Opinion Varies on Home Pricing
According to some economists, the rapidly increasing and record-high home prices will start slowing down this year. However, while some experts are forecasting a drop in prices of around 4%, others are predicting the average annual home price to increase somewhere between 5% and 6%. The number of homes on the market is also expected to go up by as much as 23%, but not because more homes are going on the market. Rather, it is merely because home sales are expected to fall by as much as 14% — the lowest since 2012. Furthermore, the time a house sits on the market is expected to double from 11 days to 22 days.
Following the housing market roller coaster we’ve experienced the past two years, expect the market to slow down. Don’t expect prices to drop as dramatically as they rose, though. This is going to be a challenging year for both buyers and sellers. No one is safe from the aftermath of the bubble. The good news, though, is that it is a necessary step in the process of getting back to a sustainable pace in the next two to three years.
The Forecast on Mortgage Rates
There are some things we can look forward to this year as we climb out of this market. For instance, industry experts do expect mortgage rates to continue to drop. Reaching a 20-year high back in November of 2022, rates have been steadily decreasing, and the trend is expected to endure. By the end of 2023, expect to see rates drop below 6%. However, economists do warn consumers not to expect rates to fall as low as 3% again.
The Near Future
The most important aspect for homebuyers is the fact that the market is not expected to balance out just yet. Because wages have not kept up with the housing market or the cost of gas and groceries, mortgage payments will still be unaffordable for most Americans. To make matters worse, fixed-rate homeowners will have to stay in their homes to keep their rates locked in rather than move to a larger or upgraded home.
With any luck, rent costs will drop, which is one prediction many are making. If so, builders will shift their focus toward rental properties, or buyers will be forced to pool their funds and purchase homes with family or friends who aren’t spouses. Whatever the year brings, it will be a slow cycle that we will have to accept — many economists believe the market will take years to correct itself.
The good news is, there are always brighter days ahead and the right real estate agent can help you navigate the current market. In the Gulf Shores, real estate is still thriving, and it’s a great time to sell or buy in Gulf Shores, Alabama. If you’re looking for an experienced realtor familiar with the exciting and beautiful Gulf Shores market, contact Kris Powell today.