Will Home Prices Rise or Fall in 2023 and Should You Wait to Find Out?
There is much contention surrounding home prices in 2023. Some real estate analysts assert prices will rise over the next two years while others maintain prices will drop significantly.
On one side of the debate, some think home values will decrease by 4% in 2023 and 5% in 2024. Some predictions are even more drastic, with analysts forecasting as much as a 10% drop over the next two years.
They argue that rising interest rates and inflation are putting downward pressure on home prices and will eventually lead to a price correction in the market.
By “price correction,” these analysts are referring to a scenario in which prices fall significantly to bring them back in line with historical, pre-pandemic norms. (This isn’t the same as a housing market collapse, which is a rapid, sharp decline in real estate values brought on by an external shock to the system, such as the 2008 financial crisis).
On the other side of the debate are those who believe home prices will either flatline or increase in 2023, citing strong demand for housing even as mortgage rates have doubled to 5.6% in 2022 from a record low of 2.65% in 2021.
Meanwhile, housing inventory across competitive markets nationwide remains relatively tight. Homes just aren’t being built fast enough to meet buyer demand.
Moreover, Fannie Mae reports that consumer confidence in the housing market has reached its lowest point since COVID, with only 17% of homeowners likely to list their homes for sale by the end of 2022 due to pandemic-related concerns.
To Buy or Sell a Home in 2023?
Given the conflicting forecasts for the housing market in 2023, what’s a potential homebuyer or seller to do?
For starters, they can stay informed of market conditions in their target locations to gain a realistic understanding of what’s happening on the ground rather than being swayed by national-level data or predictions.
For example, just because analysts are forecasting a nationwide market correction doesn’t mean prices will drop in every city or town across the U.S. Remember, real estate is a highly localized market. Therefore, what’s happening in Seattle or San Francisco may not be reflective of trends in New York City, for instance.
If anything, local market conditions could continue to heat up as they have been for the past few years.
On the other hand, some buyers and sellers have no choice but to act in 2023. Maybe they’re relocating for a new job or their family is growing and they need more space. In these cases, the market will dictate what kind of buying or selling strategy to pursue.
Whatever the case, it’s always a good idea to hire a real estate agent who has a deep understanding of these fluctuating market conditions. These experts can help prospective buyers and sellers devise the best action plan for a successful real estate transaction in 2023, whether that means waiting for more favorable market conditions or taking advantage of current opportunities.
Ultimately, the decision to buy or sell a home in the upcoming year boils down to individual circumstances. The most important thing is to stay calm and be patient while weighing the options.
Our final piece of advice?
Don’t wait to reach out to a rockstar real estate advisor for more information on what’s happening in your neck of the woods. You don’t want to be caught off-guard by a market correction or housing bubble — whichever way the market ends up going.