Housing Market Predictions

Housing Marketing Predictions for 2023

You don’t have to be a housing market expert to know that things are not going so great. Because of the low rates during COVID, people aren’t inclined to sell their house and buy a new one at a much higher interest rate. To their credit, if you had a home mortgaged at a 2.65% interest rate, you might not be too excited to sell it either. Unfortunately, this forces prospective buyers to duke it out over the slim, overpriced pickings.

“But is there hope?” you ask. Well, unfortunately Veritas Funding does not have a Magic Eight Ball, but these are our housing market predictions.

The bad news is…the market recovery might be a slow process. As long as the demand exceeds the supply, housing prices will remain high. According to chief economist Danielle Hale, “Limited inventory is also keeping prices high even though housing affordability has deteriorated significantly in the past three years.”

“So there’s no hope,” you say as you politely throw your computer across the room.

Fortunately, there is some good news. The good news is that the housing market most likely isn’t going to crash. Despite the high interest rates, home prices are continuing a steady increase. Many borrowers still have positive equity on their homes.

Furthermore, while there may not be too many pre-existing homes on the market, it seems that builders of new-construction homes see good conditions ahead. In fact, the prices of new construction builds are actually competitive with pre-existing homes! According to economist Robert Frick, “With low existing home inventory, new home inventory is becoming competitive, and new homes are now competitive on price…the premium for a median-priced new house versus an existing house is now only $5,000.”

After reading our article on new homes vs pre-owned homes, you’ll better understand just how low this gap is. Normally, new construction homes are significantly more expensive, but from October of 2022 to now, the gap in price between new homes and pre-existing homes has lessened by 96%.

Despite these victories, we’re not going to tell you that an incredible market is just around the corner, because it’s probably not. However, it does seem like things will slowly improve. Chief economist Lawrence Yun said that “the recovery has not taken place, but the housing recession is over”. It seems that things are going to get better, even if it takes time.

With this in mind, we believe that you shouldn’t wait for the market to suddenly improve before buying a home, since it looks like it’s going to be a long, slow process. Besides, if you get a home now, you can always refinance at a lower rate later when they drop. We might be stuck with this market for a while longer, but to answer the question of “is there hope?”, then the answer is a long, patient yes.