Housing Market Predictions for the Next 5 Years
Heading into 2023, demand in the real estate market continues to surpass supply, which bodes well for the next five years in terms of market trends and predictions, according to the National Association of Realtors (NAR).
However, there are different perspectives considering the future of the housing market. Let’s get into it.
The 2022 Housing Market Landscape
It has been tough sledding for homebuyers this year. Builders had to contend with the cancellation of construction, mortgage rates were rising, and home sales sunk. However, Realtor.com believes home prices are poised to increase between the end of 2022 and the end of 2023 compared to the NAR’s call for a 2.5 percent increase.
All told, it has been a chilly real estate market in 2022 due to a perfect storm of rising mortgage rates, sellers waiting on the sidelines to list their homes until market conditions improve, and buyers not being able to afford the same home they could afford a year ago.
Housing Market Predictions 2023
Zillow predicts home values will rise by 1.3 percent in the next 12 months ending September 2023. The company also warns that based on the pace of pending home sales activity and mortgage applications, there are “significant downside risks to home sale volumes into 2023”.
CoreLogic Chief Economist Selma Happ suggests that thanks to a combination of depleting housing inventory, easing mortgage rates, and improved economic data, real estate values could stabilize in 2023.
Housing Market Predictions 2024
According to a Zillow survey, the real estate market may revisit pre-pandemic levels in 2024 and first-time home buyers will likely reclaim market share in 2024. We also see that Capital Economics, a world research firm, expects housing prices to increase by 3 percent by the end of 2024.
Wall Street bank Goldman Sachs has issued a forecast for the housing market too. The firm predicts that while U.S. home prices will drop 5-10 percent over the coming year, the market will reach its bottom at the end of 2023. This will lead to leveling prices in 2024, which should stay stable through mid-year. Overall, the bank predicts a slow recovery in housing prices in 2024.
Housing Market Predictions 2025
A 2022 Zillow poll suggests that housing inventories will strengthen by 12 percent in 2025, which would undoubtedly give buyers more leverage. A Zillow survey also found that 13 percent of participants expect homebuyers to be in the driver’s seat in 2025.
Housing Market Predictions 2026
Zillow’s home price expectancy poll of economists and real estate experts shows that most participants expect home prices to rise 46.5 percent in the next four years. A more conservative cohort predicts a more modest 10.3 percent growth in the same period. In addition, a mere 8 percent of poll participants expect the housing market to largely favor homebuyers in 2026.
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