A Look at Home Price Forecasts for 2023
When you see a chart like this, as a buyer of real estate, seller of real estate or real estate professional, what do you think is going on in the market?
Slide courtesy of Keeping Current Matters, January Monthly Market Report
Besides AACCKKK!?!
If you have been reading the news you are most likely aware that real estate is a hot topic and the national headlines can be alarming.
Today, I am hoping to shed a little light on the forecasted home price appreciation levels and what that may mean in your market.
The chart above is a national forecast of home prices and what they are expected to do during 2023. The chart is broad and includes every market and micro market in the United States. As many of us know, in 2020 and 2021 there were some markets that were hotter than others; these markets saw a strong increase in sales activity and larger than normal price appreciation. In some cases, the markets appreciated in excess of 40%. Depending on the type of property that was purchased, those homes will either retain their value or may see a price depreciation.
What triggers price appreciation or depreciation?
Supply and demand remains a key factor in any market. When sellers are faced with stiff competition, the sellers who absolutely need to sell will sell for a lower price that allows them to move on from the house. A similar principal applies to a buyer who must purchase a house. They will purchase, possibly for a price that is higher than they wanted to pay.
What to expect in the market
Depending on your local real estate market, you may see strong activity with residential sales and weaker activity in some second home markets. This will vary from market to market; in the Florida market, we regularly see fluctuations in appreciation from market to market with some markets trailing or leading others in activity.
In the Orlando, FL area, we are seeing strong activity for properties for purchasers or permanent or second homes. We are seeing a slow down in investor purchases but still enough activity for long term holds.
Nationally, investor activity in the 2020 through early 2022 market was strong. This activity has slowed down and is not moving at the same frantic pace. This could signal an increase in buyer options and a market with more inventory for the first time home buyer. This may also signal a slower market for short term vacation rental properties.
Nationally, housing inventory is still lower than it was in 2018 and the average home buyer may not have enough inventory to choose from. A lack of popular supply will result in steady or increased home price appreciation. According to NAR, 2022 home prices continued to rise with 18% of the metro markets reporting double digit annual price appreciation. Nationally, home price appreciation continued in 2022 with the median U.S. home price appreciating 8.6% versus 2021. The effect of higher mortgage rates was seen in 4th quarter appreciation which at 3.9% was slower than in previous quarters.
As always, my recommendation is to consult a local real estate agent to assess your current market conditions and to assist you in the sale or your home or a home purchase. If you need a recommendation for an agent or would like more information about the Florida market, I'd be happy to help!
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