Top 5 Homebuying Trends for 2023
When reflecting on the U.S. housing market in 2022, “hot” was an understatement. The pandemic housing boom saw house prices go up by an astonishing 40% in two years. After a whirlwind and housing frenzy in 2022, many homeowners, sellers, buyers, and renters are likely wondering what 2023 has in store.
No need to consult a crystal ball – we’ve got you covered. Here is a look at some of the top trends and expectations for the U.S. housing market in 2023 based on a slew of predictions from the industry’s top experts.
Declining home prices
On the whole, many real estate industry experts predict that home prices will be dramatically lower than in recent years after a huge runup. This is because both buyers and sellers are expected to pull back from the housing market as they wait and feel out the economy.
Home prices are predicted to decrease about 5% nationally and even higher if you’re in a high-priced area, like the San Francisco Bay Area. Prices are expected to fall the most in pandemic migration hotspots like Austin, Boise, and Phoenix as well as other West Coast cities.
New home construction outlook
Construction of new single-family homes declined in 2022, despite the deficit of housing in the US. This was the first such drop in 11 years, according to USA Today. Additionally, home builder sentiment has declined for 11 straight months, which signals ongoing contraction for home building in 2023.
This is despite the strength of demand for homes and the need for the construction of new homes. It is no secret to anyone that the U.S. has a deficit of 3.8 million homes.
Mortgage rates are a mixed bag
Real estate industry experts are all over the board on what will happen with mortgage rates after they doubled compared to the start of the year 2022.
Several economists from LendingTree, Redfin, CoreLogic, and the National Association of Realtors expect mortgage rates to stabilize. One expert predicts the 30-year fixed mortgage rate will settle at 5.7%.
Realtor.com expects that mortgage rates will continue to remain high in 2023. This comes as economic growth slows but does not falter and inflation begins to decline but remains above target.
The Midwest will have its moment
During the pandemic, the Sunbelt was in the spotlight, as many Americans migrated south. Florida markets dominated, along with Tennessee, the Carolinas, and Texas. While Florida will likely continue to reign, the Midwest may be front and center in 2023.
Why? Because, according to Zillow, most regions have not had housing prices run up to extremes, like most other U.S. regions. Mortgage costs as a share of income are still healthy in areas across Ohio, Pennsylvania, Kansas, Iowa, and smaller metros in Illinois. Additionally, inventory isn’t in a massive hole compared to pre-pandemic times.
Many areas of the Midwest may allow first-time buyers or co-buyers to – finally --- take the plunge.
Buying with friends and family will gain momentum
This prediction is our favorite, of course. Housing prices have soared in recent years, making the costs far beyond what many can afford. Thus, many buyers chasing homeownership dreams are turning to unconventional means to achieve homeownership.
According to Zillow, they expect more people to team up, such as with family or friends, to buy a home. Among recent homebuyers, 18% had purchased a home along with a friend or relative who wasn’t their spouse or partner. Also, 19% of prospective homebuyers intend to buy a home with a friend or relative in the next 12 months.
Affordability and qualifying for a mortgage are cited as top reasons for cobuying.
What do you think is in store?
What do you think will happen in 2023? Will the market ease up, making housing more affordable? Are you one of the 19% of prospective buyers looking to buy a property with a friend or relative in 2023? If so, we would love to extend the opportunity to have your group join on the Nestment 100, let’s make homeownership and cobuying a reality.
Nestment, Inc. does not guarantee and is in no way responsible for the accuracy of information provided in this blog post. All information is provided “AS IS” and with all faults. Data presented here may not reflect all real estate activity in the market. While the information on this site is about legal and tax issues, it is not intended as legal or tax advice or as a substitute for the particularized advice of your own attorney and tax professional.
