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Housing Market Outlook: How Much Will Home Prices Drop in 2022? 2023?

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One of the most notable developments in the post-pandemic economy is the rapid growth of the housing market. People with means despite the fear of the first pandemic Entering the real estate sector in 2020In essence, it pushes up home prices. The Federal Reserve has also dramatically reduced benchmark rates and spurred acquisitions.

But what the Fed gives is deprived. When the central bank began to shift its policy to hawks, the housing market began to absorb the move. Recognizing that the window for joining the bright red real estate sector could soon be closed, Home list soars May.

In theory, home prices should continue to fall throughout the year, and perhaps until 2023. For one thing, rising borrowing costs significantly hinder affordability.Second, mortgage lenders are likely not to approve as many applicants as the economy slows down (and probably at risk of recession), and therefore Temporary dismissal of loan segment.. Finally, homeowners are clearly looking at the letters on the wall. It’s driving competition as homeowners are trying to secure deals in a deteriorating environment.

However, not all show a negative outlook for the housing market.

Optimistic view of the housing market

Urgency can be an important factor when it comes to determining the trajectory of home prices. Selma Hepp — Core Logic Deputy Chief Economist — despite some slowdowns to the early spring 2022 situation I believe “The market continues to see relatively strong demand from buyers and the rate of increase in home prices.”

Ralph Di Bugnara, President of Home Qualified, seems to agree with Hepp. “The summer market will remain at near high levels due to the increasing urgency of purchases,” he said. In essence, the fear of further rate hikes could still motivate future buyers to enter the housing market. DiBugnara further commented:

“Fortunately, we’re not in the housing bubble. Yes, there was a lot of demand for housing, but banking regulations after the 2008 market crash were much more restricted and remain that way. increase.”

House prices must reflect reality

Nevertheless, many believe that it is unusual for major economic and financial pivots to not affect home prices. One of those experts is real estate agent Jason Gerios. According to Bankrate, Gelios said:

“From mid-to-late 2022, as the number of homes on the market increases slightly, real estate will move away from sellers and continue to support more buyers.”

“While the market is chilling, prices aren’t necessarily declining,” said Greg McBride, chief financial analyst at Bankrate. “We expect home prices to be 15 to 20 percent higher than the prices that homes were sold 6 to 12 months ago,” continued analysts. In other words, the housing market may have more value than giving up.

Capital Economics supports this concept.this predict This is because mortgage rates have exceeded key affordable thresholds, so annual home price growth will “decrease to -5% by mid-2023 and then 3% by the end of 2024. It will gradually recover until. “

Therefore, anyone playing long games on the market may be rewarded next year.

Lessons from the past

Still, one annoyance with home prices is that it may not be wise to give full credit to professionals whose livelihoods are tied to the resilience of the home market. Experts can also be wrong — sometimes completely wrong.

In October 2005, former Fed Chairman Ben Bernanke said that house prices at the time were unlikely to rise, “There is no housing bubble going bankrupt.” Perhaps in the big debate in the housing market today, it’s best to rely on basic economic principles and good old common sense.

Publication date, Josh Enomoto I did not hold (directly or indirectly) the position of the securities listed in this article. The opinions expressed in this article are those of the authors covered by InvestorPlace.com. Public guidelines..

Josue Nomoto, a former senior business analyst at Sony Electronics, has helped mediate major contracts with Fortune Global 500 companies. Over the past few years, he has provided unique and important insights not only to the investment market, but also to various other industries including law, construction management and healthcare.

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