How Housing Market Could Look by End of 2023, According to Experts
In recent years, the real estate market has been a rollercoaster — one you might have avoided. However, if you’re hoping to buy or sell a property by the end of the year, you now have a vested interest in home prices.
The national median list price was $424,000 in March 2023, an increase from $415,000 in February, according to Realtor.com. The yearly growth rate of the median list price dropped to 6.3% in March — the lowest growth rate since June 2020; it was 7.8% in February.
By summertime, this could mean median sale prices likely will decline relative to 2022, according to Realtor.com. In February, the national median sale price dropped on an annual basis for the first time in more than 10 years.
However, the Zillow Home Value Index is 3% higher than one year ago, according to the Zillow March 2023 Market Report. Of course, this largely varies by city. In March 2023, the Zillow Home Value Index surged 8.3% in Miami and 7% in Richmond, Virginia, but declined 9.4% in San Francisco and 7.5% in Austin, Texas.
To get a better idea of what homes across the U.S. could be worth by the end of 2023, GOBankingRates spoke with several real estate experts. Here are their thoughts on the current market and where it might be headed this year.
Prices Will Vary by Region
“Prices seem more stable in the eastern half of the United States versus the more turbulent western half,” said Patrick Donoghue, vice president at Groundfloor. “Major cities in the Midwest and the South should retain price stability given that inventory continues to be low and mortgage rates have been trending lower since late 2022.”
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So far in early spring, he said, sellers have been holding onto their properties, which is helping to stabilize home prices.
“Like in big cities, many rural areas are experiencing housing shortages,” he said. “Demand in select rural areas will grow as workers continue to telecommute.”
He said people also are continuing to migrate to the southern states.
“I look for interesting dynamics to unfold as price points in rural areas are more attractive compared to larger urban centers areas,” he said.
Ultimately, he said, housing prices at the end of 2023 will depend on where you live.
“I could see further decline, albeit minimally, in the western half of the country and a slightly positive number for the eastern half. — maybe on the whole a 1% increase,” he said. “Some rural areas, especially in the Carolinas, may see growth above 1%.”
It Depends on Interest Rates
“Conservatively, the mechanics are in place for what we’ve historically seen as average appreciation of 3% to 5% overall,” said Bret Ceren, associate broker at Platinum Living Realty in Phoenix. “If we can get or maintain enough supply to not hamper the existing demand, then I’m bullish to believe we’ll see twice that rate nationally, from a 6% to 10% appreciation.”
He said this all depends on interest rates.
“If we see them get into the 5% range, we will see sellers who have been sitting on the sidelines because of their rate put their homes on market and millions more buyers nationally also get back in,” he said. “This will fuel higher prices because the excess demand has just been waiting for an acceptable interest rate range to get back into the market.”
The Market Will Stabilize
“The 2023 housing market is signaling a nobody’s market,” said Alex Capozzolo, co-founder at Brotherly Love Real Estate. “After several years of a seller’s market, it is now normalizing.”
He said the current market might look like a bubble, but it isn’t for a variety of reasons. This includes mortgage lending becoming more stringent, a decline in the popularity of adjustable-rate mortgages, low housing inventory keeping demand high and low foreclosure rates.
“These trends forecast that towards the third quarter of 2023, market conditions might be better and more stable,” he said.
He also noted that different areas will see different types of price changes.
“Homes in rural areas are selling much faster than in 2022,” he said. “Properties in suburban and rural areas will continue to remain popular as post-Covid remote work continues to motivate buyers to prioritize space over city living.”
While plenty of speculation can be done, there’s ultimately no real way to know what home prices will be by the end of 2023. If you’re waiting to make a move, keep a close eye on properties that compare to the type you’re looking to buy or sell in your area.
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