Housing experts’ and economists’ predictions are not in agreement.

So, what’s in store for the housing market this year? Home prices rose nearly 40% from the spring of 2020 to the spring of 2022, representing roughly a decade of price gains in just a couple of years. Will what went up also come down? Housing experts and economists are not in agreement. Economists’ predictions range from prices rising by around 5% this year, according to Realtor.com, to as much as a 22% decline from the peak in 2022 to the trough, according to John Burns Real Estate Consulting. What happens with inventory, mortgage rates, and the broader economy will likely determine which tack the market takes. “Mortgage rates are really critical to the path of the housing market in the year ahead,” said Jeff Tucker, senior economist at Zillow. “We are watching to see affordability gradually improve. That should breathe some life back into the market.”

Another thing he’s keeping an eye on is inventory of homes for sale, which is already almost back up to where it was in 2020, he said. “Yes, things have cooled way down in the housing market, but we don’t have a glut of homes for sale,” said Tucker. “That is the main thing that is buffering us from runaway price declines.” Zillow forecasts that home prices nationally will decline by between 1% and 4% from last June’s levels, the 2022 peak. In 2023, we may see a mirror image of 2022 — a somewhat trying first half that gives way to a surprisingly strong back half of the year for buyers, said Leonard Steinberg, corporate broker at Compass in New York. “The would-be buyers that stepped back from the market in late 2022 can’t and won’t stay away forever, especially given the competing demands from first-time buyers looking to get into the market and retirees looking to move or downsize,” Steinberg said. Chronic under-building of new homes is also likely to remain a challenge across all market segments as builders grapple with the challenge of balancing a short-term decline in demand with the long-term need for more new housing, he added.

Source: CNN