When we look back at history, we’ll likely find our pandemic and post pandemic real estate market is highly unique. Industry experts are starting to make their 2023 home price forecasts. As they do, most agree homes will continue to gain value, just at a slower pace.
Where prices are headed- Experts weigh in
Over the past couple of years, home prices have risen at an unsustainable rate, leaving many to wonder how long it would last. If you’re asking yourself: what’s ahead for the price of my home, know that experts are now answering this question, and its welcome news for homeowners who may have been led by the media to believe their home would lose value.
Historically, home prices have appreciated at a rate near 4%. For 2023, the average of six major forecasters noted below is 2.5%. While one, Zelman & Associates, is calling for depreciation, the other five are calling for appreciation. The graph below outlines each expert forecast to show where they project home prices are going in the coming year.
To understand why experts are calling for appreciation next year, look to the economics of supply and demand. Dave Ramsey, Financial Expert, says this:
“The root issue of what drives house prices almost always is supply and demand . . .”
Two things are driving home prices upward. First, the under supply of homes on the market is an issue we continue to face in this country. We still don’t have enough homes on the market for the number of people that want to buy them. To further that point, we’re still in a sellers’ market nationally, and in that scenario, home prices tend to appreciate.
Second, millennials are moving through their peak home buying years. Since they’re the largest demographic behind the baby boomers, demand isn’t going away any time soon.
Experts are calling for home prices to appreciate next year, although at a slower pace than the previous three years. However, you may want to click on the Zelman link (in the text above the graph) to see a valid opposing viewpoint. Overall, the dynamics of supply and demand are playing out in real estate and will continue for many years to come. That is with one big caveat- each market is different, and a good realtor is one of your best resources to help understand what is going on in your region and neighborhood, so contact us today! We would love to help!