Table of Content
- Housing Markets Which Are Predicted to See a Decline in Home Prices
- Housing Market Forecast 2024 & 2025: Predictions for Next 5 Years
- Rising Mortgage Rates May Force Some Buyers Out of the Market
- The Mortgage Industry Will Remain Tight
- Mortgage applications rose 0.9% in the latest week, the Mortgage Bankers Association said
- Thursday, Friday are Weather Alert Days with arriving arctic front
- Khloe Kardashian's Jordans Worn at Bronny's Game Skyrocket On Resale Market
Nonetheless, the markets in California may be an outlier, with San Francisco perhaps seeing price decreases of 10-15%. In 2023, the foreclosure rate will be lower than ever before, accounting for less than one percent of all mortgages. Here's what some of the experts predict will happen in the housing market in the next five years.
For example, the Federal Reserve could continue to increase federal interest rates. While the Fed doesn’t directly set mortgage rates, federal rate hikes usually cause mortgage lenders to raise their rates too. Some buyers may back out of the market to avoid those higher rates. But again, the pandemic had so many buyers putting off their plans to buy a home. So buyer demand is still greater than housing supply—which is why prices will continue to go up, but at a slower pace.
Housing Markets Which Are Predicted to See a Decline in Home Prices
This index is used to measure how simple it is to get a mortgage. CoreLogic HPI™ is designed to provide an early indication of home price trends. The CoreLogic Home Price Insights report features an interactive view of its Home Price Index product with analysis through August 2022 with forecasts through August 2023. United States home prices nationwide, including distressed sales, increased year over year by 13.5% in August 2022 compared with August 2021. There is little consensus among economists, mortgage firms, banks, and real estate firms regarding whether the historically tight U.S. housing market will reverse course in 2023. The accounting firm KPMG LLP forecasts that the U.S. housing market would decline by as much as 20% between 2022 and 2023.

In cases of a tie, forecasted year-over-year sales growth was used as a tiebreaker. Sellers have pulled back from selling if they didn’t get their listed price after seeing so many houses sell above list price for years and even bidding wars being common. Other sellers have even held off listing their house at all if prices in there area have dropped. Home values slipped 0.2% in November, resuming a slow decline that began this summer. Once again, the proximate cause could be traced to high mortgage rates, which reached a 20-year high of 6.90% on average this October, deterring sales that closed in November.
Housing Market Forecast 2024 & 2025: Predictions for Next 5 Years
Home buyers priced out of the market face additional challenges, as high and rising rents may reduce their ability to save for a down payment even further. There is an abundance of speculation regarding the forecast of the housing market in 2023. However, what about the real estate forecasts for 2023, 2025, and so on? Although, it is quite difficult to forecast the housing market for the next five years here is an insight into what most experts predict can happen. With the economy mired in a recession and inflation effectively blowing up interest rates, it might seem like a non-ideal time to purchase a house. As we near the end of 2022, many borrowers and first-time buyers are wondering where the housing market is going.
Stocks that investors will enjoy for wealth generation for hopefully decades to come. Perhaps you can find renters in the meantime, or do a rent-to-own arrangement. Instead, work with a professional who does great comparisons and can help you set the perfect number. They should also have a strong marketing strategy to help you sell quickly. If your house is unique and doesn’t appeal to everyone, take some extra steps in your marketing.
Rising Mortgage Rates May Force Some Buyers Out of the Market
Inventory is still declining on a year-over-year basis in 8 markets including Hartford (-25.7%), Virginia Beach (-11.0%), Milwaukee (-9.6%), and Chicago (-9.6%). The share of homes having their price reduced grew from 9.2% last November to 19.6% this year. The share is now well above pre-pandemic levels but has peaked seasonally and is below October’s 20.9% share.
Because homes represent the largest single purchase most people will make in their lifetime, it’s crucial to be in a solid financial position before diving in. The median existing-home sales price was $379,100 in October, up 6.6% from a year ago but down from the record high of $413,800 in June, according to the National Association of Realtors . Still, the higher housing costs have taken a toll on home shoppers as mortgage applications are at their lowest level in 25 years, according to the Mortgage Bankers Association .
The forecast for 5.2 million existing home sales in 2022, also reflects recent market changes and continued weakness in leading indicators of the metric. Homebuyers continued to be deterred by mortgage affordability problems, resulting in less competition and a larger supply of available houses. Since last year, the housing market has cooled dramatically, and homes are now staying on the market for much longer, whether they sell or not.

Only 4 of the 50 largest metros saw the number of newly listed homes increase compared to last year. Inventory increased in 42 out of 50 of the largest metros compared to last year. Metros which saw the most inventory growth include Phoenix (+173.9%), Raleigh (+167.4%), and Nashville (+145.0%).
However, analysts anticipate that price changes will vary significantly between regions of the United States. The Zillow home price expectations survey found that the housing market is likely to become a buyer's market by 2023. The panel also predicts rent growth to outpace inflation during the next 12 months, as priced-out potential home buyers exert additional pressure on the rental market. The 0.7% month-over-month price fall also reflects a decrease in homebuyer enthusiasm, with roughly three-quarters of states reporting declines since July. The states with the highest increases year over year were Florida (26.4%), Tennessee (20%), and North Carolina (19.9%). These large cities continued to experience price increases in August, with Miami on top at 27.1% followed by Phoenix at 17.8%, andLas Vegas also at 17.8% year over year.
We expect cross-market activity to continue in 2023, as affordability will keep these top markets in the spotlight for homebuyers. Whether it is retirees looking for a lower cost of living, or young families seeking larger homes, better school districts or a higher quality of life, they will continue to find these qualities in smaller markets. This trend accelerated in 2022, as surging mortgage rates sidelined a large number of buyers.
In fact, according to the National Association of Realtors, the national median existing-home price already dropped from $413,800 in June 2022 to $403,800 in July 2022. Since 2000, the housing market had grown rapidly, with housing prices reaching their peak in 2006. In 2007, mortgage rates began to increase, and in late 2008, house prices dropped dramatically. When homeowners couldn’t pay back the mortgages on the inflated purchase prices, they defaulted and millions of homes went into foreclosure, contributing to the economic crisis called the Great Recession. Rent growth should remain strong in the short term as high home prices keep many would-be first-time buyers in the rental market. Over the next 12 months, rents are expected to grow more than inflation, stocks, and home values.
Goldman Sachs and Wells Fargo estimate the market will decline by 7.5% and 5.5%, respectively. Interest rates fluctuate daily, but overall, they’re a lot higher than they were in 2021. This stinks because it means new buyers entering the market will end up paying thousands more dollars in interest on their house over time. Higher interest rates also drop your purchasing power—meaning some houses will be priced completely out of your budget.