The last few years have been turbulent in the real estate industry. After a heated market marked by bidding wars, low interest rates and rising prices, mortgage rates rose to their highest levels in his 20 years, slowing both buying activity and buying prices.
Still, home prices are still high, including in the Philadelphia area, as inventory is still low.
There are many predictions about where the housing market will head in 2023. After all, buying a home often requires long-term planning. We asked several residential real estate experts about his five-year predictions for the housing market. I’m watching you in 2027.
But first, a snapshot of the national residential real estate scene as of Fall 2022.
Home sale price: September 2022 data from the National Association of Realtors (NAR) shows that the median resale home price is up 8.4% from a year ago to $384,800. The current national average selling price for a new home is $470,600, up about 14% from a year ago, said the assistant vice-president of the National Association of Home Builders (NAHB) in charge of forecasting and analysis. said Danushka Nanayakkara-Skillington.
stock: While higher than in January 2022, housing supply remains historically low, said Lawrence Yuen, chief economist and senior vice president of research at the NAR. In September 2022, he had 3.2 months of unsold inventory of second-hand homes.
Days on Market: Homes continue to sell rapidly as inventory remains tight. According to his NAR data for September, the average number of days on the market for homes sold in September 2022 ranged from 13 to 23 depending on price. In a more typical market, 45 days, Yun said.
Homes sold: There are fewer pre-owned homes for sale nationwide. According to his NAR data for September, through 2022, the seasonally adjusted total figure fell from 6.49 million in January to 4.71 million in September. Meanwhile, sales of new single-family homes in July 2022 will be at a seasonally adjusted annualized rate of 511,000, down 29.6% from July 2021, according to the U.S. Census Bureau and the Department of Housing and Urban Development.
30 year mortgage interest rate: According to Freddie Mac, as of Nov. 10, the average interest rate on current 30-year fixed mortgages is 7.08%, the highest in 20 years.
A new home begins: The seasonally adjusted annual rate of new single-family housing starts was 892,000, down 18.5% from last year, according to Nanayakkara-Skillington.
Mortgage rates could continue to rise for weeks or months, Yoon said, adding that he expects rates to hover around 7% for the remainder of this year and most of next year. rice field. Within two years, this rate should return to 5.5% or 6%, he adds. Nanayakkara-Skillington agrees, predicting the rate will drop to around 6% by mid-2024.
Yun predicts little to no change in purchase price tags on a national basis next year, up or down by about 5%. The only exception is California, where the market could fall 10%, he says. Overall, he expects prices to rise a total of 15% to 25% over his five years.
Despite showing properties like a bubble, Yoon doesn’t expect the residential real estate market to explode. Sales next year, he predicts, will remain at 5.3 million units, but will gradually increase thereafter, reaching 6 million units annually by 2027.
He added that despite rising mortgage rates, house prices are still above the levels of a year ago. Even a 5% drop next year is far from a crash. That’s a drop of one-third.
“We don’t have enough inventory, so the 30% decline won’t happen,” he says. “Crashes come from oversupply.” He believes housing shortages will continue this year and supply will offset him within five years.
Yun expects a seller’s market to continue while housing inventory remains low. However, he predicts that by his five years there will be a balanced market where neither buyers nor sellers dominate. Instead, bargaining power between parties becomes more equal and depends on individual cases.
HomeLight executive editor Caroline Feeney feels that the shift away from the seller’s market has already begun. According to a recent survey conducted by the company, only 51% of her HomeLight agents currently describe their local market as a seller’s market. She also expects it to become a balanced market within a few years.
With hybrid work schedules becoming the norm and commuting no longer making sense, Yun predicts the suburban market will remain strong. Meanwhile, 55% of HomeLight’s top agents said the markets that heated up the fastest during the pandemic (including Austin, Phoenix and Boise) cooled first and could see the biggest drops during market corrections. High, Feeney said. Yoon expects growth in areas with growing populations: Carolina, Florida, Texas and Tennessee. Supporting his predictions, Nanayakkara-Skillington said his 50% of new single-family construction is in the south.
The number of single-family homes under construction has declined over the past four months. By contrast, the number of multifamily homes under construction has increased in recent years, says Feeney. Feeney attributes the increase to a lower price tag (apartments tend to be cheaper than single-family homes) and pressure on local governments to fill the shortage. Provides more affordable housing.
Still, with mortgage rates high and building material prices skyrocketing, Nanayakkara-Skillington said growth in the multi-family housing market should stabilize within a few years, with new openings dropping by 8% in 2023. , and is expected to decline another 5% in 2024.