2023 will be tougher for the housing market, but not the worst. National Association of Realtors (NAR).
The annual Real Estate Forecast Summit, hosted by the NAR, delivered its verdict late last year on 2023.of prognosisNAR chief economist Lawrence Yun summarized .While an imminent housing market catastrophe is unlikely, all current trends point to declining home sales and slowing home price growth in most areas. It shows that it is a slowing year.
That said, Yoon identifies several emerging housing markets that are likely to see prices rise in 2023, as Austin and other cities did during the pandemic.
Home sales continue to decline
The most important prediction is that home sales will continue to decline in 2023. 2022, will probably continue. Existing home sales are down 16% in 2022 and are now at their lowest level since 2014.
Start of new housing construction It’s trending closer to the historical average and slightly better. The new housing start market has weathered its worst crisis since the 2008 financial crisis and has made a slow but steady recovery over the past decade.
The slowdown in this segment of the housing market next year represents an overall downward trend, but as Yun points out, “New home sales actually plummeted during foreclosures, so sales of existing homes fell sharply. It has endured better than I did.” It never fully recovered from the crisis, so it had a low reference standard for comparison. ”
Home price growth flat or declining
Home price growth is expected to level off in 2023, marking the official end of the Covid price boom.Current forecast is average Only 0.3% increase The average home price is about $455,000. What that really means is that the housing market is still growing slowly.
According to NAR, we avoided a major crash or near-crisis. The job market has proven to remain strong, some markets are holding up prices, and inflation is starting to ease. Yun said, “Currently, there is a layoff in the mortgage industry. The technology industry may have stopped hiring talent, but looking at the net, there are still conditions for job creation. ” points out.
Another lifeline that has prevented a crash is the mortgage market. It’s no exaggeration to say that the tightening of borrowing regulations after the 2008 subprime mortgage crisis has made the housing market more resilient. “Subprime mortgages, or shady, risky, self-reported mortgages, were ubiquitous last cycle. There are no loans,” said Yun. The NAR also predicts: Mortgage rates fall below 6% Sometime in Q3 2023, it will stay there until the end of the year.
Finally, the gap between demand and supply will not disappear anytime soon. This means that buyer demand will continue to support the market over the next few months, with most regions except California, where home prices are expected to experience a significant 10-15% decline. It means that house prices are stable.
Next Austin?
The NAR points to the following metropolitan cities as hotspots for the housing market in 2023:
- Atlanta, Georgia
- Raleigh, North Carolina
- Dallas, Texas – Fort Worth
- Fayetteville – Springdale – Rogers, Arkansas – Missouri
- greenville, south carolina
- Charleston, South Carolina
- Huntsville, Alabama
- jacksonville, florida
- San Antonio, Texas
- Knoxville, Tennessee
In 2023, the South will lead the way. “Southern states generally meet the criteria of affordability, immigration and high-paying job creation,” Yoon said.
Real estate investors should be aware of this trend if they want to take advantage of these market opportunities before they inevitably become oversaturated, as is the case with Austin.
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Note by BiggerPockets: These are opinions written by the authors and do not necessarily represent the opinions of BiggerPockets.