Here’s my expectation for the housing market for 2023. The housing market of 2022 has been defined by two key factors: inflation and rapidly rising mortgage rates. In many ways, the market has been put into a reset position.
Here’s another thing to watch out for, when the Federal Reserve (the Fed) made moves this year to try to lower inflation, mortgage rates more than doubled in a single calendar year—something that had never happened before in anyone’s lifetime. This had a cascading impact on buyer activity, the balance between supply and demand, and ultimately home prices. And as all those things changed, some buyers and sellers put their plans on hold until they felt more confident about where prices were headed.
But what does that mean for us next year? What I personally want is more stability in the market. And to get there, we’ll need to see the Federal Reserve continue to bring inflation down and keep it there. Here are some housing market experts' predictions for next year:
Experts agree that, if oil prices remain high, mortgage rates will also be high. But if oil prices fall, mortgage rates will likely follow suit. While there may be early signs that inflation is easing as we round out this year, we’re not out of the woods just yet. Inflation is still something to watch in 2023.
Experts are currently analyzing all of this data, which is being factored into their mortgage rate forecasts for next year. (see chart below):
I get a lot of questions on what will happen to Home Prices next year? Homes prices are always determined by supply and demand. The fewer homes there are on the market, and the more buyers there are, the higher home prices will climb. That’s exactly what we saw during the pandemic.
Below is a graph showing the latest home price forecasts for 2023. As you can see from the different colored bars, some experts are predicting an increase in home prices next year and others predict a decrease. However, if we take the average of all these forecasts (shown in green), we can get a feel for what may happen in 2023.
The truth probably lies somewhere in the middle. That means a relatively flat or neutral appreciation of the dollar will be likely in 2023.
Next year, mortgage rates are likely to play a major role in determining home prices. Let me help you stay informed about what experts are predicting for this year and next by connecting with me.