Los Angeles

Home prices are expected to keep rising next year: Here’s where

Americans who are looking to purchase a home in the next year will see less competition, more houses to choose from, and the highest average mortgage rate in almost two decades. What they shouldn’t expect is a widespread drop in home prices, which would provide relief for priced-out homeowners.

This is the main takeaway from Realtor.com’s 2023 Forecast, released Wednesday. According to Danielle Hale, Realtor.com’s chief economist and chief economist, home price drops “may not occur as quickly as people have expected.” According to CBS MoneyWatch, prices will rise in the first half 2023 while they will fall or remain flat in the second half next year.

Hale stated that “we expect, for 2023 as a whole,” Hale said. Shoppers looking to purchase might need to wait.

The housing market will soon forget 2022, which saw skyrocketing home prices and mortgage rates. Prices rose by double-digit percentages in some cities, such as Boise, Idaho, and Austin, Texas. Many aspiring homeowners were discouraged by the rising cost of homeownership and opted to rent instead.

While home prices have declined in many places during the tail-end of 2022, mortgage rates have continued their upward trend. This week’s average fixed interest rate on a 30-year mortgage was 6.6%, which is more than twice the rate at the beginning of the year.

 

Low home sales due to high mortgage rates

02:09

 

Realtor.com predicts that mortgage rates will rise even more in the first half of next year, as the Federal Reserve raises its benchmark interest rate. According to the company, mortgage rates could rise as high as 7.4% during the first half 2023 and then settle down to 7.1% in the second half. Realtor.com predicts that the average monthly mortgage payment will rise by 28% next year due to increases in loan rates and property prices.

Many potential buyers have been stalled by the rapid rise in prices. LendingTree recently conducted a survey and found that nearly half of the respondents were putting off major decisions such as renting longer or doing major home renovations.

Hale stated that mortgage rates rose so quickly this year that it was difficult for buyers to determine how much house they can afford. She said that interest rates won’t fluctuate nearly as much in 2023.

She stated that buyers will be able to set the right budget if there is more stability. “This should encourage people to return to the housing market.

 

30-year fixed-rate mortgage average reaches highest level since 2001

03:05

 

The largest metropolitan areas

According to Realtor.com, home prices are likely to rise in the 100 largest metropolitan areas of the country. In Grand Rapids (Michigan); Portland, Maine; Providence Rhode Island; Spokane Washington; Worcester, Massachusetts, expect 10% increases.

Realtor.com stated that higher prices will likely discourage many potential homebuyers. This will cause rent prices to rise 6.3% and decrease the number of homes sold by 14%. But, the housing inventory, which is the number of homes for sale, is expected to rise nearly 23% next to last year. This could give buyers a wider selection of options.

Hale stated that all these predictions are subject to change depending on how the Federal Reserve deals with inflation next month or early next year. The Fed has raised the benchmark rate six more times this year. Mortgage rates have also risen with each increase. Hale and other economists anticipate that the Fed will raise its rate next month, although perhaps not as much as in previous increases.

In his 2023 housing prediction, Knock CEO Sean Black stated that the Fed has failed to rein in inflation. “Sellers still have the advantage in the majority of the nation’s largest metros and many will continue favoring sellers well into 2023.”

Khristopher J.

Khristopher Brooks is a CBS MoneyWatch reporter covering financial, consumer and business stories. These stories range from economic inequality to housing issues and bankruptcies to the business of sport.

source

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button