Housing Market Cooling Off in 2023: Top Markets Slowing Down (2024)

FAQs

Will the US housing market decline to worsen in 2023? ›

While a housing price correction is expected, we aren't in a housing bubble. Demand for homes remains high, and there are fewer home sellers than there were in 2022. And while the market is cooling, experts don't expect an actual housing crash or a housing bubble burst in 2023.

According to the CoreLogic HPI Forecast, home prices are projected to continue their upward trajectory. The forecast indicates an expected month-over-month increase of 0.8% from March 2023 to April 2023 and a year-over-year increase of 4.6% from March 2023 to March 2024.

It's also worth noting that while foreclosure rates are up year-over-year, experts do not expect to see a wave of foreclosures in 2023, even where home values are depreciating, as many homeowners have substantial equity due to progressive home price appreciation in recent years.

Homebuyer.com data analysis indicates that, for first-time home buyers, June 2023 is a good time to buy a house relative to later in the year. This article provides an unbiased look at current mortgage rates, housing market conditions, and market sentiment.

Chief Economist at First American Financial Corp, Mark Fleming, says an interest rate drop may not happen for several months. "Possibly in 2024, but it will depend on the Fed's decisions about raising rates in the second half of the year," says Fleming.

Overall, the Florida housing market is likely to remain strong in 2023, with continued demand for homes and steady price growth. However, the market may begin to stabilize as the growth rate slows down, which may lead to more balanced conditions between buyers and sellers.

With mortgage rates declining faster than expected, home prices are likely to remain mostly flat throughout 2024. This will be good news for buyers who have been waiting on the sidelines for a good time to enter the market.

Fannie Mae: Economists at the firm predict that U.S. home prices, as measured by the Fannie Mae HPI, will fall 1.2% in 2023 and another 2.2% dip in 2024. That's a big upgrade from March, when Fannie Mae predicted national home prices would fall 4.2% in 2023 and another 2.3% dip in 2024.

In my opinion, real estate is one intelligent option to consider in 2023, as it often has excellent returns, tax advantages and provides diversification even in the face of a challenging economic climate. Real estate also has the potential to compound your investment.

Fannie Mae expects U.S. home prices to fall -1.2% between Q4 2022 and Q4 2023, and then another -2.2% between Q4 2023 and Q4 2024.

What happens to my mortgage if the housing market crashes? ›

What happens to my mortgage if the housing market crashes? A housing market crash won't affect your existing fixed-rate mortgage. However, if the value of your home drops below your purchase price, then you'll be making payments that are greater than the worth of your property.

Before a recession hits, home prices are typically at an all-time high. This means that selling your home before a recession will result in a higher profit between the purchase price of the real estate and the sale price, which can increase your capital gains taxes.

So far in 2023, the Fed raised rates 0.25 percentage points twice. If they hike rates at the May meeting, it is likely to be another 0.25% jump, meaning interest rates will have increased by 0.75% in 2023, up to 5.25%.

If you need to be occupying your home by a certain date to save on rent, it's a much better deal to close at the end of the previous month (for example, January 30) instead of the beginning of the current month (February 1).

These organizations predict that mortgage rates will decline through the first quarter of 2024. Fannie Mae, Mortgage Bankers Association and National Association of Realtors expect mortgage rates to drop through the first quarter of 2024, by half a percentage point to about nine-tenths of a percentage point.

'I believe by the end of 2023 we will see rates start to fall with a target of between 2.5 to 3 per cent in 2024. 'I believe if the base rate can get back to circa 2.5 per cent, then we will see rates hovering around that mark with a return to products that have not been seen in the mortgage industry for some time.'

“We expect that 30-year mortgage rates will end 2023 at 5.2%,” the organization noted in its forecast commentary. It since has walked back its forecast slightly but still sees rates dipping below 6%, to 5.6%, by the end of the year.

Selling a home in Florida

Florida sellers still have the upper hand in Florida, simply because there aren't enough homes available to meet demand. In April, there was just a 2.6-month supply of single-family homes; 5 or 6 months is considered a balanced market.

Are Florida house prices dropping? ›

In April 2023, 14.8% of homes in Florida sold below list price, down 28.8 points year. There were only 26.5% of homes that had price drops, up from 15.0% of homes in April last year. There was a 97.3% sale-to-list price, down 3.3 points year over year. …

Paying off your mortgage early can save you a lot of money in the long run. Even a small extra monthly payment can allow you to own your home sooner. Make sure you have an emergency fund before you put your money toward your loan.

30-Year Mortgage Rate forecast for April 2024. Maximum interest rate 6.92%, minimum 6.36%. The average for the month 6.59%. The 30-Year Mortgage Rate forecast at the end of the month 6.72%.

The Average US Home Could be Worth $382,000 by 2030

House prices in the US have risen by 48.55% in the last ten years (from $173k to $257k) and if they continue to grow at this rate for another decade, the average US home will be worth $382k by 2030.

In 2023, economic activity is projected to stagnate, with rising unemployment and falling inflation. Interest rates are projected to remain high initially and then gradually decrease in the next few years as inflation continues to slow.

Overall, investment growth is projected to decelerate markedly from 4% in 2022 to 0.9% in 2023. Gradual normalisation of economic activity is expected to reinvigorate companies' investment decisions, pushing overall investment growth up by 2.1% in 2024. Inflation keeps eroding the purchasing power of consumers.

The baseline forecast is for growth to fall from 3.4 percent in 2022 to 2.8 percent in 2023, before settling at 3.0 percent in 2024. Advanced economies are expected to see an especially pronounced growth slowdown, from 2.7 percent in 2022 to 1.3 percent in 2023.

Despite what some may think, 2023 is still a good year to invest in real estate, thanks to advantages like long-term appreciation, steady rental income, and the opportunity to hedge against inflation. Mortgage rates are expected to decline, but the housing market is likely to remain competitive due to low supply.

2023 is a balanced year for housing supply and demand. This is ideal for retail purchasers and rental property investors. No longer a “seller's” market. Rising interest rates raise the monthly mortgage payment, which reduces homebuyers and lowers property values.

Will 2026 be a good year to buy a house? ›

Housing Market Predictions 2026

A more conservative cohort predicts a more modest 10.3 percent growth in the same period. In addition, a mere 8 percent of poll participants expect the housing market to largely favor homebuyers in 2026.

According to a recent note to clients, Goldman Sachs analysts predict that by the end of 2024, home prices will plunge by 19% in Austin, 16% in Phoenix, 15% in San Francisco, and 12% in Seattle.

Stick to the 28/36 Rule

No matter how you finance your home purchase, most experts agree that people should not spend more than 28% of their gross income on housing expenses, and no more than 36% on debt. For example, if you earn $5,000 each month, your ideal mortgage payment should be no more than $1,400 per month.

During a traditional recession, the Fed will usually lower interest rates. This creates an incentive for people to spend money and stimulate the economy. It also typically leads to more affordable mortgage rates, which leads to more opportunity for homebuyers.

During a housing market crash, the value of a home decreases. You will find sellers that are eager to reduce their asking prices.

The median price for a U.S. home sold during the fourth quarter of 2008 fell to $180,100, down from $205,700 during the last quarter of 2007. Prices fell by a record 9.5% in 2008, to $197,100, compared to $217,900 in 2007. In comparison, median home prices dipped a mere 1.6% between 2006 and 2007.

Buying a property during a recession has advantages

Auctions may yield a reasonably priced house. To boost the economy, the Fed reduces interest rates during recessions. Banks decrease rates, including mortgage rates. Cheaper mortgage rates mean lower house costs over time.

On the other hand, the throes of a recession might be the worst time to sell a home. During a recession, potential buyers may experience a sharp decline in income, affecting their ability to be approved for a mortgage.

Despite the fact that there are some troubling trends in the housing market, we're likely not going to see a crash in 2023 or 2024. While house prices are likely to drop, demand for housing caused by America's ongoing housing shortage is likely to keep prices relatively stable.

What is the mortgage rate forecast for the next 5 years? ›

ING predicts rates to range from 5% in the second quarter of 2023, rising to 5.5% in the third quarter, and then falling back to 5% in the final quarter of the year. They also predict interest rates ranging between 3% and 4.25% in 2024, staying at 3% by the end of 2025.

Lower closing costs: Closing later in the month will reduce your closing costs because your upfront interest and taxes will be calculated from the date of closing to the last day of the month, leaving a shorter amount of time for interest and taxes to accrue.

Too much visual interest can create a dizzying effect. When it comes to accessories, follow the “3-to-5-foot” rule for surface décor and knickknacks: surfaces in the 3-foot to 5-foot range, such as coffee tables and credenzas, should have the right balance of accents but be clear of clutter.

So what happens to all the furniture items that get cut from a stager's arsenal? They're sold off — and oftentimes at a discount. If you want to get your hands on a gently used piece of furniture at a below-market price, here's how to find home stager sales.

The Georgia housing market continues to be robust in 2023 by a combination of high demand, limited supply, and steadily increasing house selling prices. A study finds that Georgia has the most overpriced housing market in America.

Will homes continue to remain financially out of reach for many purchasers next year? Experts say hopeful buyers should not expect today's high prices to plummet anytime soon. “Home prices won't drop in 2023,” Evangelou says. “I expect pricing to be relatively flat.”

Will nyc home prices drop in 2023? ›

Market Forecast for 2023

The New York State housing market is likely to continue struggling in 2023 due to the low inventory of homes and rising mortgage interest rates. However, as the interest rates start to decline, they can increase demand for real estate and raise home prices.

A downturn in general economic activity leads to less disposable income, job losses, and fewer job openings, which decreases the demand for housing. A recession is particularly dangerous. Demand is exhausted, bringing supply and demand into equilibrium and slowing the rapid pace of home price appreciation.

How the Atlanta Housing Market Changed in 2022. Single-family home construction slowed down in Atlanta in 2022 compared with 2021. Based on data from the U.S. Census Bureau, permit activity dropped from 2,272 in January 2022 to 1,348 in January 2023 – a 41% year-over-year decrease.

According to data from Florida Atlantic University, Atlanta has the most overpriced housing market in the United States. The capital of the Peach State beats out multiple Florida cities, Charlotte, North Carolina, and Memphis, Tennessee to take the top spot for 2023.

Home Sales. Increasing mortgage rates will surely have a major impact on home sales in 2023. With the observed trend, higher interest rates could cause a 10% drop in home sales next year. Home listings will no longer go out of inventory at a faster pace.

“[W]ith the rate of inflation decelerating rates should gently decline over the course of 2023.” Fannie Mae. 30-year fixed rate mortgage will average 6.4% for Q2 2023, according to the May Housing Forecast. National Association of Realtors (NAR).

In March 2023, the median home price in New Jersey was $660,000, according to Redfin data, marking a 2.2% decrease year over year. On a national level, the median home price in March 2023 was $401,000, down 2.4% from a year prior.

It is currently a seller's market in New Jersey. Although listing prices are low right now, the increasing demand is causing homes to sell quickly.

Despite what some may think, 2023 is still a good year to invest in real estate, thanks to advantages like long-term appreciation, steady rental income, and the opportunity to hedge against inflation. Mortgage rates are expected to decline, but the housing market is likely to remain competitive due to low supply.

Just because there's a recession doesn't necessarily mean rent prices go down. In fact, during the 2008 recession, it was the exact opposite. In the current rental market, we have seen the rate of increase in rental prices come down, but this only translates to lower rent prices if you're in select markets.

Is the NYC real estate market slowing? ›

NYC housing prices dropped starting in mid-2022, when rising mortgage rates forced many buyers out of the market. As a result, sellers had to lower listing prices (or at least be more willing to negotiate), just to get buyers in the door.

As prices become unsustainable and interest rates rise, purchasers withdraw. Borrowers are discouraged from taking out loans when interest rates rise. On the other side, house construction will be affected as well; costs will rise, and the market supply of housing will shrink as a result.

Buying a property during a recession has advantages

This encourages sellers to cut their listing prices to sell their homes faster. Auctions may yield a reasonably priced house. To boost the economy, the Fed reduces interest rates during recessions. Banks decrease rates, including mortgage rates.

When will the housing market crash? Actually, economists do not think it will. Housing economists point to five main reasons that the market will not crash anytime soon: low inventory, lack of new-construction housing, large amounts of new buyers, strict lending standards and a drop in foreclosures.