The housing market may not be as hot in 2023 as it was in the first half of 2022 when home prices rose and inventory was tight. But it is still expected to be a seller’s market, according to economists and real estate experts. Talk to a Liberty Lending consultant to learn more.
It is also likely that millennials will continue to drive the residential real estate market for years to come, as they enter the average home-buying age and become the largest segment of the American population. Combined with shortages in the housing supply, this will make it difficult for builders to produce enough homes to meet demand.
Renters have also been hit hard by the pandemic housing boom, as many were forced to increase their rents as prices skyrocketed. For example, renters in New York City received lease renewals with eye-popping increases, sometimes as high as 40 or 50 percent, according to Rent Cafe.
In some markets, the impact has been more significant than in others. But in most areas, renters have seen their homes become more affordable. The housing market is a complex system of supply, demand, and affordability. It is dependent on many factors, such as demographics, local economic conditions, and job growth. If the economy continues to expand, then prices may rise and inventory will remain low. However, if the economy begins to slow or worsen, prices and inventory may plummet.
It is important to remember that the housing market has historically been volatile and sticky. This is because buyers and sellers are in fear of “catching a falling knife.” They will prefer to hold on to their imagined paper gains as long as possible, limiting transactions. Fortunately, today’s homeowners stand on much more secure footing than those in the past. The vast majority of borrowers have positive equity in their homes, and they also have low mortgage rates, which reduces the risk that they will default on their loans.
As such, a crash in the housing market is unlikely to occur. In fact, Zillow predicts that the average homeowner will see an increase in their equity in 2023 and that mortgage products are becoming less risky. While this could cause some shopper frustration, it is also an opportunity for those who have a home to take advantage of their property’s value and sell it in order to generate a profit. In addition, there are opportunities for landlords to reposition their properties and earn extra income through rent.
A healthy dose of patience will be required to create success in the housing market in 2023 since rental rates are still high and consumers need to be flexible and creative to find deals. The state of the housing market in 2023 will vary from area to area, but the following are some predictions for what to expect:
As the nation continues to enter a period of declining home prices and increasing mortgage rates, the market will struggle to keep up with growing demand and slowing inventory. But if the economy recovers in 2023, then homeowners and homebuyers alike will be able to enjoy some relief. Contact Liberty Lending today and begin your real estate journey!