I have been getting asked this question more than any other for the past few months, what will happen with housing prices next year?. Many of my clients lived through the mortgage meltdown of 2008 and are still scared. Many of my clients are young and have never seen mortgage interest rates over 7%. The rapid and unprecedented rise in interest rates coupled with the rapid pricing increases of the past couple years and the lack of inventory, have left us with many questions regarding the housing market. Although we don’t have a crystal ball, these predictions for 2023 paints an interesting picture.
Redfin’s 2023 Housing Market Forecast makes 12 predictions on key housing metrics to paint a picture for the upcoming year.
Each prediction starts with the most likely scenario, which is what we’ll focus on here. You can also read the full forecast for alternate scenarios based on the outcome of the Fed’s efforts to bring inflation under control.
REDFIN’S 12 PREDICTIONS FOR 2023
#1: HOME SALES WILL DROP TO THEIR LOWEST LEVEL SINCE 2011
#2: MORTGAGE RATES WILL DECLINE, ENDING THE YEAR BELOW 6%
#3: HOME PRICES WILL POST THEIR FIRST YEAR-OVER-YEAR DECLINE IN 10 YEARS, BUT THE U.S. WILL AVOID A FLOOD OF FORECLOSURES
#4: RENTS WILL FALL, AND MANY WILL CONTINUE RENTING INDEFINITELY
#5: MIDWEST AND NORTHEAST MARKETS WILL HOLD UP BEST
#6: BUILDERS WILL FOCUS MORE ON MULTIFAMILY RENTALS
#7: INVESTOR ACTIVITY WILL HIT BOTTOM IN THE SPRING AND THEN REBOUND
#8: GEN ZERS WILL LOOK FOR JOBS AND APARTMENTS IN RELATIVELY AFFORDABLE MID-TIER METROS
#9: MIGRATION FROM ONE PART OF THE COUNTRY TO ANOTHER WILL EASE UP
#10: RISING DISASTER-INSURANCE COSTS WILL MAKE HIGH-CLIMATE-RISK HOMES EVEN MORE EXPENSIVE
#11: MORE METROS WILL FOLLOW MINNEAPOLIS’ YIMBY EXAMPLE TO REIN IN HOUSING COSTS
#12: BUYERS’ AGENT COMMISSIONS WILL SEE A SLIGHT INCREASE
Key Details:
- Redfin’s 2023 Housing Market Forecast features 12 predictions on key housing metrics
- Redfin economists expect a post-pandemic sales slump that will drive home prices down for the first time in 10 years
- While high mortgage rates will continue to dampen home sales, high homeowner equity and a strong job market will prevent a flood of foreclosures
Dec 8, 2022
