Showing posts with label Zillow. Show all posts
Showing posts with label Zillow. Show all posts

Sunday, September 4

Housing Market Decline to Worsen


Will house prices go down in 2023? Depending on who you ask, the forecast for 2023 is mixed. Most experts in the housing industry predict fewer buyer demand, lower prices, and higher borrowing rates. Rate increases, along with a shortage of availability, have pushed many purchasers to the sidelines. Home prices may fall slightly, but not drastically as they did in 2008. Some believe that the housing market will continue to outperform compared to the pre-pandemic.



Hence, there is no clarity regarding housing forecasts for 2023. CoreLogic, Fannie Mae, Freddie Mac, and Zillow all predict that home prices will grow next year albeit slightly. If inflation persists, the Fed could tighten more than anticipated by the financial markets. This would result in higher mortgage rates, which will impact the U.S. housing market. If inflation falls or a recession develops in the near future, the Fed may soften financial conditions.



Here's when the home prices can drop in 2022. While this may appear to be oversimplified, it is how markets work. Prices drop when demand is met. There is now an excessive demand for houses in several property markets, and there simply aren't enough homes to sell to prospective purchasers. Home construction has increased in recent years, although they are still far behind. Thus, big drops in housing prices would necessitate considerable drops in buyer demand.



Demand falls mostly as a result of higher interest rates or a general weakening of the economy. Rising interest rates would ultimately need far less demand and far more housing supply than we now have. Even if price growth slows this year, a fall in home prices is quite unlikely. As a result, there will be no fall in house values in 2022; rather, a pullback, which is natural for any asset class. In the United States, house price growth is forecasted to just “moderate” or slow down in 2022 as well as 2023.



By the end of the year, home price growth is anticipated to moderate to around 5 percent. The S&P CoreLogic Case-Shiller National Home Price Index increased 20,4% from a year earlier in April, down from 20,6% the previous month. The Case-Shiller Index is the three-month moving average of the prices of houses sold (i.e. February to April).  READ MORE...