One property group has predicted that property sales could plunge in 2023 as rising mortgage rates and unaffordable home prices are pushing more buyers aside. Home sellers need to prepare for the tough years ahead.
According to Realtor.com’s 2023 Housing, the number of homes for sale fell 14.1% to 4.53 million units, the highest number of real estate transactions since 2012, when the US was still recovering from the housing crash and Great Recession. weather.
The pandemic has sparked a massive boom in real estate sales, fueled by a combination of record-low mortgage rates and work-from-home orders from many employers. Home prices have surged almost 40% since early 2020, and mortgage rates have more than doubled since the beginning of the year, causing many buyers to exit the market.
Sellers could bear the brunt of that impact next year, according to new forecasts from Realtor.com.
“High house prices and mortgage rates [will] We will limit the pool of eligible homebuyers to 2023.”
Home sales are expected to fall the hardest in California and Florida. According to Realtor.com’s forecast, the biggest drop in sales volume will occur in these cities.
- Ventura, CA: -29.1% decrease
- San Jose, CA: -28.8%
- Bradenton, FL: -28.7%
- San Diego, CA: -27.3%
- Palm Bay, FL: -18.3%
- Los Angeles, CA: -15.8%
- Tampa, FL: -15.6%
- Tucson, Arizona: -14.7%
- Fresno, CA: -13.7%
- San Francisco: -13.3%
Potential on the bright side for sellers
On the bright side for sellers, according to Realtor.com’s 2023 Housing, average selling prices in the top 100 US markets are likely to rise by an average of 5.4% next year. weather.
Not everyone is optimistic about house prices in 2023. Some economistsProperty prices could plunge as much as 20% next year due to soaring mortgage rates and economic uncertainty.
Realtor.com predicts a rise in home prices next year, but the pace of escalation represents a slower pace than the rampant rise of the past two years. Realtor.com chief his economist Daniel Hale told his CBS MoneyWatch that prices are likely to rise in the first half of 2023 but fall or level off in the second half of next year.
“Overall, we expect 2023 to be even higher,” Hale said. “Shoppers who want to buy may have to wait a bit.”
Realtor.com predicts that some cities will experience more dramatic price increases than others. The metropolitan areas with the fastest growth are:
- Worcester, Massachusetts: 10.6%
- Portland, Maine: 10.3%
- Grand Rapids, Michigan: 10%
- Providence, Rhode Island: 9.8%
- Spokane, Washington: 9.6%
- Springfield, Massachusetts: 8.9%
- Boise, Idaho: 8.7%
- Chattanooga, Tennessee: 8.2%
- Indianapolis, Indiana: 7.8%
- Milwaukee, Wisconsin: 7.7%
These price increases could discourage buyers whose property valuations are already skyrocketing in 2022. and Austin, Texas—he saw double-digit growth this year.
Rising homeownership costs have deterred many aspiring buyers, choosing to continue renting instead. In a recent survey by LendingTree, nearly half of respondents said that Said They were holding off on major decisions to either rent for a longer period or hold off on major home renovations.
Home prices have fallen in some regions through the end of 2022, but mortgage rates continue to rise. Average interest rates on 30-year fixed mortgages this week were about 6.6%, more than double what he was at the beginning of the year.
Realtor.com expects mortgage rates to rise further early next year as the Federal Reserve continues to raise benchmark interest rates. Mortgage rates could reach 7.4% in the first half of 2023 and settle at around 7.1% in the second half, according to the company.
Realtor.com projects that a combination of rising home prices in 2023 and mortgage rates could push a typical monthly mortgage payment in 2023 to $2,430, or 28% more than this year. increase.
Mortgage rates have risen sharply this year, making it difficult at times for buyers to determine how many homes they can afford, Hale said. In 2023, interest rates probably won’t fluctuate much, she said.
“The more stable it is, the easier it is for buyers to set appropriate budgets,” she said. “And that should help push people back into the housing market.”
With buyers on the sidelines, the number of homes available for sale is expected to increase by nearly 23% next year. The benefit for buyers is greater choice, but sellers face more competition.
Indeed, all of these projections could change depending on how the Fed handles its fight against inflation next month and early next year.Six times this year, and each time, mortgage rates have also increased. Hale and other economists expect the Fed to raise rates again next month, but probably not as much as previous hikes.