The housing market has seen a few bumps in 2018, with labor and material shortages plaguing the U.S. economy. But what does the future hold? Here are some predictions for housing prices in the next five years. Read on for tips on real estate in a slowdown.
Is Real Estate Slowing Down?
If you’ve been following the housing market lately, you’ve probably noticed that there’s been a lot of talk about the housing market slowing down. While home prices continue to rise, the rate of increase is slower than it has been in recent history.
As a result, more sellers are cutting their prices, resulting in a slower market. While this slowdown may be cheered by potential buyers, the market is not likely to crash on a massive scale.
One of the biggest problems for sellers is the lack of inventory. While inventory has increased a bit, it is still well below pre-pandemic levels. This is a problem because the inventory is not keeping up with demand. Years of under building and population growth in the US have reduced the number of available homes.
This shortage is making it difficult for sellers to compete with a rising demand. As a result, the market will remain tight through 2022. As a result, buyers are likely to face bidding wars for the hottest properties.
Tips on Real Estate Slowing Down
The real estate market has slowed down for a number of reasons, including a shortage of inventory and rising mortgage rates. Although the market has slowed, there are still several ways for agents to stay productive and grow their client base. Follow these tips to make the most of the slow time.
First, double-check your local market trends. If your area is experiencing a significant slowdown, don’t price your home too low based on national housing trends. Some markets may still be hot, so double-checking your local market trend is a smart move.
Remember, a slowing market doesn’t mean that it’s too late to sell your home.
Will Home Prices Drops in 2023?
The housing market is in a tight spot right now. If housing prices continue to increase, the monthly payment may be too much for many to afford. Rising mortgage rates and fewer sellers in the market could push prices even higher. This would increase the chance of a 2023 crash.
Rising prices would also put more buyers out of the market and create affordability issues for many. However, some cash buyers may prefer to wait for lower prices. Those who have cash may be able to make the payments on time without being affected by rising mortgage rates.
However, the housing market may continue to deteriorate in some regions, and in other areas, prices could rise slightly. This is based on estimates from major real estate companies. Goldman Sachs, for example, projects that new-home sales will fall by more than 20 percent this year and 18 percent in 2023.
The decline in sales is the result of a shortage of homes in certain areas. On the other hand, rising mortgage rates have also dampened home sales, making them more difficult to sell.
There is still hope for the housing market, however. Some analysts predict a drop in home prices by 2023. In fact, house prices have already dropped in some markets. And while many people are hopeful, it is still premature to say that prices will continue to drop in the years ahead.
In the coming years, rising mortgage rates will make it more difficult for homebuyers. However, this is a temporary situation and will only last a few years. Unlike the recent boom, the decrease will likely be relatively short in duration. As a result, buyers will see the decrease as a second chance to purchase a home.
Housing Predictions For Next 5 Years
One of the main concerns with the current housing market is the high price of homes. However, experts predict that prices will level off over the next five years. In addition, while mortgage rates will increase, they will remain historically low
. Meanwhile, the number of homes sold will increase, reaching a 16-year high. The overall market will still remain strong and homebuyer demand will remain high, but the price will grow at a slower pace.
According to a Zillow study, housing inventory will decrease in the next two years. However, most respondents expect inventory to rebound to 1.5 million units or more by 2024. The second-largest percentage predicts that inventory will increase in 2023. Regardless of the future housing market trends, it is imperative to plan accordingly.
A growing millennial population is expected to drive the housing market in the coming years. As the largest generation in history, millennials are expected to form households at record rates. In addition, they will be the largest age group to purchase a home. As a result, home prices and rents are expected to rise throughout the next five years.
Further, the Fed has increased the money supply by 50% in the past two years, as part of its efforts to stimulate the economy after the pandemic. Inevitably, more money means more demand for housing.
While Zillow is bullish on the future of home prices, Freddie Mac is less sure. They predict that prices will slow in 2022. A 5-percent decline would not be a significant decrease. Moreover, rising mortgage rates will likely curtail the home purchase process.
Prediction on Morgage Rates
A recent economist’s report predicted that the housing market will begin to cool down by 2022. The reason is the unsustainable rise in home prices. As a result, homebuying will slow down, but mortgage rates are not likely to fall dramatically any time soon.
The Mortgage Bankers Association (MBA) also backs Helali’s prediction, predicting mid-to-high 4% mortgage rates for the rest of this year and next.
Mortgage rates have steadily risen since April, but an 8% rate by 2023 is unlikely. According to the National Association of Realtors, a 30-year mortgage rate will remain between 5% and 5.5% for most of 2023. However, the forecast is a little more optimistic.
The Fed has already started to raise rates, and this has led to a gradual slowdown in house sales and price growth. This slowdown may be good or bad for buyers and sellers. In the coming months, there is likely to be a shortage of available homes, which will make it difficult for people to buy or sell a home.
Whether the housing market is slowing down will depend on the market in your neighborhood.
According to the Federal Reserve, the federal funds rate may rise aggressively, and mortgage rates may rise as high as 5% in the coming years. This is still a great rate compared to past decades. However, the Fed could increase rates even further.
The latest mortgage rate report shows that rates are expected to reach 4.8% by the end of this year and 4.6% by the end of 2024. However, this forecast is not necessarily based on any specific forecast, and there are many factors that could affect the rate of mortgage rates.
I have given you a lot of ideas and tips on Real Estate Slowdown. What are you planning on doing, ride it out a couple of years, move or something else. Please comment below.