Housing market predictions for 2023: Will this be a good year to buy a home?
As we enter the New Year, experts have made a series of projections for the housing market in 2023.
The past few years have seen great upheaval in the United States’ housing market, a period of instability sparked by the covid-19 pandemic in early 2020.
At first the economic shutdown left interest rates, and therefore mortgage rates, on the floor. However to address sustained high inflation during 2022 the Federal Reserve instituted a number of interest rate hikes, making borrowing especially expensive.
After this fluctuation it is difficult to predict where the housing market will go in 2023, but Forbes spoke to a number of real estate experts to get their take on the outlook for the year ahead…
Sales will likely be down in 2023
Instability has been the characterising trend of the past few years, and one that is rarely a recipe for economic strength. The housing market has broadly favoured the seller in recent years, but this could change in 2023 with experts expecting homes to stay on the market for longer before a buyer is found.
Danielle Hale, chief economist at Realtor.com, believes that the total number of sales could be down this year, due to the changeable mortgage conditions making agreements more difficult.
Hale said: “We expect home sales to be dramatically lower, down 14.1% compared to 2022 as both buyers and sellers pull back from a housing market and economy in transition.
Millennials may make their leap into the housing market
While overall sales could well be down this year, certain groups may decide that this is the right time to make the plunge. The general churn of the housing market will continue for those who feel the need to buy or sell, and first-time buyers will be eager to get on the housing ladder after a turbulent few years.
Nick Bailey, president and CEO of real estate agents RE/MAX, said he expects “extreme demand” in places this year, and that “the Millennial home buyers, who make up a huge demographic, are primed to make their move.”
He cites a survey carried out by his firm which found that 79% of Millennials plan to buy a home or condo in the next few years.
Improvement, but not recovery
What is beyond question is that the economy has been rocked in recent years by the pandemic and the related measures. Any predictions are made against a general trend of instability in the housing market.
In 2022 the Federal Reserve was forced to impose a number of interest rate hikes in a bid to get rampant inflation under control. This made borrowing expensive and disincentivised buyers.
However, according to Redfin’s deputy chief economist Taylor Marr, there may be signs that conditions are gradually improving.
He said: “Slowing inflation and the hope of the Fed easing rate hikes in the New Year are likely to bring mortgage rates down further and thereby improve homebuying demand.”
“But don’t call it a comeback or even a recovery yet; demand is still way down from its peak.”