According to Forbes Advisor, here are some Real Estate Market Trends and Predictions for 2023:
“Due, in part, to the ongoing inventory crunch keeping home prices elevated, many economists predict the housing market is more likely to correct itself from the double-digit percentage jumps in home prices over the past few years rather than crash.
The latest S&P CoreLogic Case-Shiller Home Price Index aligns with that sentiment, showing signs that the housing market has experienced its correction and is now on its way to recovery.
The index posted a month-over-month national price increase of 1.3% for April before the seasonal adjustment. After a seasonal adjustment, the month-over-month increase was 1.7%. This is the third consecutive month of modest national increases following decreases over seven straight months.
Yet, like the FHFA HPI, regional patterns exposed stark differences in price trajectories, with top-performing Miami on a nine-month home price gain hot streak coming in with a 5.2% month-to-month gain and west coast pandemic boomtowns Seattle and San Francisco bringing up the rear at -12.4% and -11.1%, respectively.
“If I were trying to make a case that the decline in home prices that began in June 2022 had definitively ended in January 2023, April’s data would bolster my argument,” said Craig J. Lazzara, managing director at S&P DJI, in the report. “Whether we see further support for that view in coming months will depend on how well the market navigates the challenges posed by current mortgage rates and the continuing possibility of economic weakness.”
Despite some areas seeing price declines, experts point out that today’s homeowners stand on much more secure footing than those coming out of the 2008 financial crisis, with many borrowers having positive equity in their homes. Consequently, the likelihood of a housing market crash is low.
“Homeowner equity is at the highest level it’s been in the past several decades, so homeowners have a lot of value in their home,” says Nicole Bachaud, an economist at Zillow.
Will There Be a Lot of Foreclosures in 2023?
Though foreclosures are trending up, the numbers align with expectations, said Rob Barber, chief executive officer at ATTOM, a property data provider, in a report.
In May, foreclosure filings were up 7% from April and 14% from last year, according to ATTOM. Foreclosure completions were up 38% from the previous month and 41% from a year ago.
“This upward trajectory suggests the possibility of continued heightened activity, and with foreclosure completions seeing the largest monthly increase this year, we will continue to monitor the potential impacts this may have on the housing market,” said Barber.
The top five states with the most foreclosure completions in May were, from highest to lowest, Illinois, Ohio, Michigan, Texas and Pennsylvania.
While foreclosure rates are up year-over-year, experts do not expect to see a wave of foreclosures in 2023. Even in areas with depreciating home values, many homeowners have substantial equity due to progressive home price appreciation in recent years.
When Should I Buy a Home in 2023?
Buying a house – in any market – is a highly personal decision. Because homes represent the largest single purchase most people will make in their lifetime, it’s crucial to be in a solid financial position before diving in.
Use a mortgage calculator to estimate your monthly housing costs based on your down payment and interest rate.
Trying to predict what might happen this year is not the best homebuying strategy. “Buyers sitting on the sidelines today in anticipation of lower prices tomorrow may end up disappointed,” says Neda Navab, president of the U.S. region at Compass, a real estate tech company.
“The housing market—like so many other markets—is almost impossible to time,“ says Divounguy. “The best time for prospective buyers is when they find a home that they like, that meets their family’s current and foreseeable needs and that they can afford.”
Divounguy says “getting on the housing ladder” is worthwhile to begin building equity and net worth.
Instead of waiting for much lower prices, experts suggest buying a home based on your budget and needs. If you find a home you love in an area you love, and it also fits your budget, then chances are it might be right for you. However, if you make too many sacrifices just to get a house, you may end up with buyer’s remorse, potentially forcing you to offload the house.
Tips for Buying in Today’s Housing Market
Even as prices soften, you may realize that the area where you want to buy a home is still out of reach, so it’s important to be flexible.
“If you badly want a house and can work remotely or switch jobs, moving to lower-priced housing markets is a good idea to consider,” says Robert Frick, corporate economist at Navy Federal Credit Union. “Millions of Americans have done that already.”
Also, get all your ducks in a row in advance – review your financial situation, gather required documents, shop multiple lenders and strengthen your credit score. That way, when you find your dream home, you’ll be in a better position to act fast in a tight market.
“Only the best prepared, with their financing lined up, a solid understanding of what they can afford, and constant checking of prices and listings will be successful in today’s highly-competitive market,” says Frick. “Know how much your monthly payment will be—complete with taxes—and how well that fits into your budget.”
Getting to know a local realtor where you’re hoping to buy can also potentially give you a crucial edge in a tight housing market.
“Find out what your options are with a reputable, experienced agent,” Divounguy says. “A lack of inventory means buyers should expect plenty of competition, especially in more affordable areas and for more affordable houses.
However, if you’re a first-time homebuyer you should be especially careful when choosing an agent.
“With the market’s shift, you want to hire an expert who’s been there before, has a pulse on all the changes happening in your desired neighborhood and works well with your loan officer.”
Tips for Selling in Today’s Housing Market
“Sellers should make sure to work with an agent in order to get their pricing right,” Divounguy says.
Divounguy adds that homes that are priced right are the ones that get the competition while others linger on the market.
He also advises sellers to take steps sooner rather than later to get their houses ready to sell.
“The top regret we hear from sellers year after year is that they wish they started prepping their home for sale sooner,” Divounguy says. “And don’t neglect your online curb appeal.”
Divounguy also advises sellers to include a 3-D home virtual tour or an interactive floor plan in their listings. He reports that listings that utilize these virtual tools on Zillow get 69% more page views and 80% more saves.”
