Fall is here and the end of the year is officially in sight and too far off in the distance. This has many people wondering what is in store for home prices next year and experts have already started to make their predictions. The views are proving to be good news for homeowners who may have thought the future was going to be grim.
In past years homes have been appreciating quite rapidly as we all know. Predictions for 2023’s home price appreciation are arriving at an average of 2.5% by forecasters including Fannie Mae, HPES, Freddie Mac, MBA, NAR, and Zelman. Zelman & Associates was the only entity that projected a small depreciation of 3%.
Financial expert, Dave Ramsey sums it up by saying “The root issue of what drives house prices almost always is supply and demand . . .”
The two main contributions that play into this are that there still is an ongoing lack of supply of housing stock that we are experiencing across the country. While climbing rates will weaken buying power, there is still a large pool of buyers who are eager to make a home purchase with few options. Inventory levels are below a 6 month supply which tells us that we still remain in a seller’s market for now.
The other factor that plays a role in the forecast for demand is who makes up this large pool of buyers. That pool is millennials and they are the second largest demographic behind baby boomers and they are amidst their peak homebuying years.
Ultimately nobody has a crystal ball to tell us exactly how things will play out and what markets will experience which trends. However, when we review some of these important elements that comprise today’s real estate market landscape it looks like we can expect home prices to still appreciate just not as aggressively as we have seen in recent years.
