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Expert Home Price Forecasts Revised Up for 2023

Toward the end of last year, there were a number of headlines saying home prices were going to fall substantially in 2023. That led to a lot of fear and questions about whether there was going to be a repeat of the housing crash that happened back in 2008. But the headlines got it wrong.

While there was a slight home price correction after the sky-high price appreciation during the ‘unicorn’ years, nationally, home prices didn’t come crashing down. If anything, prices were a lot more resilient than many people expected.

Let’s take a look at some of the expert forecasts from late last year stacked against their most recent forecasts to show that even the experts recognize they were overly pessimistic.

Expert Home Price Forecasts: Then and Now

This visual shows the 2023 home price forecasts from seven organizations. It provides the original 2023 forecasts (released in late 2022) for what would happen to home prices by the end of this year and their most recently revised 2023 forecasts (see chart below):

As the red in the middle column shows, in all instances, their original forecast called for home prices to fall. But, if you look at the right column, you’ll see all experts have updated their projections for the year-end to show they expect prices to either be flat or have positive growth. That’s a significant change from the original negative numbers.

There are a number of reasons why home prices are so resilient to falling. As Odeta Kushi, Deputy Chief Economist at First American, says:

“One thing is for sure, having long-term, fixed-rate debt in the U.S. protects homeowners from payment shock, acts as an inflation hedge – your primary household expense doesn’t change when inflation rises – and is a reason why home prices in the U.S. are downside sticky.”

A Look Forward To Get Ahead of the Next Headlines

For home prices, you’re going to continue to see misleading media coverage in the months ahead. That’s because there’s seasonality to home price appreciation and they’re going to misunderstand that. Here’s what you need to know to get ahead of the next round of negative headlines.

As activity in the housing market slows at the end of this year (as it typically does each year), home price growth will slow too. But, this doesn’t mean prices are falling – it’s just that they’re not increasing as quickly as they were when the market was in the peak homebuying season.

Basically, deceleration of appreciation is not the same thing as home prices depreciating.

Bottom Line

The headlines have an impact, even if they’re not true. While the media said home prices would fall significantly in their coverage at the end of last year, that didn’t happen. Connect with a real estate agent so you have a trusted resource to help you separate fact from fiction with reliable data.

Why Median Home Sales Price Is Confusing Right Now

The National Association of Realtors (NAR) is set to release its most recent Existing Home Sales (EHS) report tomorrow. This monthly release provides information on the volume of sales and price trends for homes that have previously been owned. In the upcoming release, it’ll likely say home prices are down. This may seem a bit confusing, especially if you’ve been following along and reading the blogs saying home prices have hit the bottom and have since rebounded.

So, why would this say home prices are falling when so many other price reports say they’re going back up? It all depends on the methodology of each one. NAR reports on the median home sales price, while some other sources use repeat sales prices. Here’s how those approaches differ.

The Center for Real Estate Studies at Wichita State University explains median sales prices like this:

“The median sale price measures the ‘middle’ price of homes that sold, meaning that half of the homes sold for a higher price and half sold for less . . . For example, if more lower-priced homes have sold recently, the median sale price would decline (because the “middle” home is now a lower-priced home), even if the value of each individual home is rising.”

Investopedia helps define what a repeat sales approach means:

“Repeat-sales methods calculate changes in home prices based on sales of the same property, thereby avoiding the problem of trying to account for price differences in homes with varying characteristics.”

The Challenge with the Median Home Sales Price Today

As the quotes above say, the approaches can tell different stories. That’s why median home sales price data (like EHS) may say prices are down, even though the vast majority of the repeat sales reports show prices are appreciating again.

Bill McBride, Author of the Calculated Risk blog, sums the difference up like this:

“Median prices are distorted by the mix and repeat sales indexes like Case-Shiller and FHFA are probably better for measuring prices.”

To drive this point home, here’s a simple explanation of median value (see visual below). Let’s say you have three coins in your pocket, and you decide to line them up according to their value from low to high. If you have one nickel and two dimes, the median value (the middle one) is 10 cents. If you have two nickels and one dime, the median value is now five cents.

In both cases, a nickel is still worth five cents and a dime is still worth 10 cents. The value of each coin didn’t change.

That’s why using the median home sales price as a gauge of what’s happening with home values may be confusing right now. Most buyers look at home prices as a starting point to determine if they match their budgets. But most people buy homes based on the monthly mortgage payment they can afford, not just the price of the house. When mortgage rates are higher, you may have to buy a less expensive home to keep your monthly housing expense affordable.

That’s why a greater number of ‘less-expensive’ houses are selling right now – and that’s causing the median home sales price to decline. But that doesn’t mean any single house lost value.

When you see the stories in the media that prices are falling later this week, remember the coins. Just because the median home sales price changes, it doesn’t mean home prices are falling. What it means is the mix of homes being sold is being impacted by affordability and current mortgage rates.

Bottom Line

For a more in-depth understanding of home price trends and reports, reach out to a local real estate professional.

People Want Less Expensive Homes – And Builders Are Responding

In today’s housing market, there are two main affordability challenges impacting buyers: mortgage rates that are higher than they’ve been the past couple of years, and rising home prices caused by low inventory. To overcome those challenges, many people are working with their agents to find less expensive homes. And with newly built homes making up a historically large percentage of the total available inventory today, that search often includes brand new homes.

People Are Spending Less on Newly Built Homes

The graph below uses the latest information from the Census to show, in June, more of the newly built home sales in this country were in lower price ranges than in 2022:Last year, only 58% of newly built home sales were less than $500,000. This June, that number was up to 65%. This means more people are buying less expensive newly built homes right now while affordability remains a challenge.

Builders Are Offering Lower-Cost Options

Builders have picked up on this trend and are reacting accordingly. George Ratiu, Chief Economist at Keeping Current Matters, explains:

“Builders are also responding to this shift by bringing slightly smaller homes to market in an effort to meet lower price points . . .”

New data from the Census further confirms this pattern – it shows the median sales price of newly built homes has dipped down in recent months (see graph below):And as Mikaela Arroyo, Director of the New Home Trends Institute at John Burns Real Estate Consulting, says, the builders who are most responsive to this trend are forming pathways to homeownership:

“. . . it is creating opportunities for people to be able to afford an entry-level home in an area. . . . if you get that size down, that automatically will make it a more affordable home. The [builders] that are decreasing [size] the most are probably the ones that try to build more of an affordable product.”

How an Agent Can Help

Builders producing smaller, less expensive newly built homes give you more affordable options at a time when that’s really needed. If you’re hoping to buy a home soon, partner with a local real estate agent to find out what’s available in your area. An agent can help you look at newly built homes or ones under construction nearby.

Bottom Line

If you’re having a hard time finding a home you like in your budget, connect with a real estate professional. You need an agent who knows all about the latest inventory in your area, including homes still under construction or just built. That way you have an expert on your side who can provide information on builder reputations, builder contracts and negotiations, and more to help you with the homebuying process.

Home Prices Are Back on the Rise [INFOGRAPHIC]

Some Highlights

Looking at monthly home price data from six expert sources shows the worst home price declines are behind us, and they’re rising again nationally.
If you’ve put your plans to move on pause because you were worried about home prices crashing, this rebound is good news.
Connect with a local real estate agent so you know what’s happening with prices in your area.

Housing Market Forecast for the Rest of 2023 [INFOGRAPHIC]

Some Highlights

Need to know what specialists say will occur in the remainder of 2023? Residence prices are already appreciating once more in lots of areas. The common of the professional forecasts exhibits constructive price development.
The place mortgage rates go for the remainder of the year will rely upon inflation. Primarily based on historic developments, rates are more likely to ease as inflation continues to chill.
Regardless that low inventory continues to be a problem, specialists venture 5 million properties will nonetheless sell this 12 months. That pace ought to choose up if rates come down.

Pricing Your House Right Still Matters Today

Whereas this isn’t the frenzied market we noticed through the ‘unicorn’ years, properties which can be priced proper are nonetheless promoting shortly and seeing a number of affords proper now. That’s as a result of the variety of homes for sale continues to be so low. Data from the Nationwide Affiliation of Realtors (NAR) reveals 76% of properties bought inside a month and the typical noticed 3.5 affords in June.

To set your self as much as see benefits like these, you’ll want to depend on an agent. Solely an agent has the experience wanted to search out the correct asking value for your home. Right here’s what’s at stake if that value isn’t correct for at this time’s market worth.

The value you set for your home sends a message to potential patrons.

Value it too low and also you may increase questions on your private home’s situation or lead patrons to imagine one thing is flawed with it. To not point out, if you happen to undervalue your home, you would go away cash on the desk, which decreases your future shopping for energy.

However, value it too excessive and also you run the danger of deterring patrons from ever touring it within the first place. When that occurs, you might have to do a value drop to attempt to re-ignite curiosity in your home when it sits on the market for some time. However remember {that a} value drop will be seen as a crimson flag for some patrons who will surprise why the value was diminished and what which means concerning the dwelling.

A recent article from NerdWallet sums it up like this:

“Your own home’s market debut is your first likelihood to draw a purchaser and it’s vital to get the pricing proper. If your private home is overpriced, you run the danger of patrons not seeing the itemizing . . . However value your home too low and you would find yourself leaving some severe cash on the desk. A bargain-basement value might additionally flip some patrons away, as they could surprise if there are any underlying issues with the home.”

Consider pricing your private home as a goal. Your aim is to purpose immediately for the middle – not too excessive, not too low, however proper at market worth.

Pricing your home pretty primarily based on market circumstances will increase the possibility you’ll have extra patrons who’re interested by buying it. That makes it extra possible you’ll see a number of affords too. Plus, when properties are priced proper, they nonetheless are inclined to promote shortly.

To get a high-level look into the potential downsides of over or underpricing your home and the perks that include pricing it at market worth, see the chart under:

Lean on a Skilled’s Experience to Value Your Home Proper

So why is an agent important find the correct value? Your native agent has the ability and the perception mandatory to search out the market worth of your private home. They’ll use their experience to find out a sensible itemizing value by assessing:

The costs of just lately bought properties
The present market circumstances
The dimensions and situation of your home
The situation of your home

Backside Line

Pricing your home at market worth is crucial, so don’t depend on guesswork. Work with a trusted actual property agent to ensure your home is priced proper for at this time’s market.

Don’t Fall for the Next Shocking Headlines About Home Prices

For those who’re considering of buying or selling a home, one of many largest questions you have got proper now might be: what’s occurring with residence costs? And it’s no shock you don’t have the readability you want on that subject. A part of the problem is how headlines are speaking about costs.

They’re basing their destructive information by comparing present stats to the previous few years. However you’ll be able to’t examine this 12 months to the ‘unicorn’ years (when residence costs reached file highs that have been unsustainable). And as costs start to normalize now, they’re speaking about it prefer it’s a foul factor and making folks concern what’s subsequent. However the worst home price declines are already behind us. What we’re beginning to see now could be the return to extra regular home price appreciation.

To assist make residence value tendencies simpler to know, let’s concentrate on what’s typical for the market and omit the previous few years since they have been anomalies.

Let’s begin by speaking about seasonality in actual property. Within the housing market, there are predictable ebbs and flows that occur annually. Spring is the height homebuying season when the market is most lively. That exercise is usually nonetheless sturdy in the summertime however begins to wane because the cooler months method. Residence costs observe together with seasonality as a result of costs recognize most when one thing is in excessive demand.

That’s why, earlier than the irregular years we simply skilled, there was a dependable long-term residence value pattern. The graph beneath makes use of knowledge from Case-Shiller to point out typical month-to-month residence value motion from 1973 via 2021 (not adjusted, so you’ll be able to see the seasonality):

As the information from the final 48 years exhibits, firstly of the 12 months, residence costs develop, however not as a lot as they do coming into the spring and summer season markets. That’s as a result of the market is much less lively in January and February since fewer folks transfer within the cooler months. Because the market transitions into the height homebuying season within the spring, exercise ramps up, and residential costs go up much more in response. Then, as fall and winter method, exercise eases once more. Value development slows, however nonetheless sometimes appreciates.

Why This Is So Essential to Perceive

Within the coming months, because the housing market strikes additional right into a extra predictable seasonal rhythm, you’re going to see much more headlines that both get what’s occurring with residence costs improper or, on the very least, are deceptive. These headlines would possibly use a lot of value phrases, like:

Appreciation: when costs improve.
Deceleration of appreciation: when costs proceed to understand, however at a slower or extra average tempo.
Depreciation: when costs lower.

They’re going to mistake the slowing residence value development (deceleration of appreciation) that’s typical of market seasonality within the fall and winter and suppose costs are falling (depreciation). Don’t let these headlines confuse you or spark concern. As a substitute, keep in mind it’s regular to see a deceleration of appreciation, slowing residence value development, because the months go by.

Backside Line

In case you have questions on what’s occurring with residence costs in your space, join with a trusted actual property skilled.

Home Prices Are Rebounding

In the event you’re following the information right this moment, you might really feel a bit not sure about what’s taking place with home prices and concern whether or not or not the worst is but to return. That’s as a result of right this moment’s headlines are portray an unnecessarily negative image. If we take a year-over-year view, dwelling costs did drop some, however that’s as a result of we’re evaluating to a ‘unicorn’ year when costs peaked effectively past the norm.

To keep away from an unfair comparability to that earlier peak, we have to have a look at month-to-month knowledge. And that tells a really completely different and way more constructive story. Whereas native dwelling worth traits nonetheless differ by market, right here’s what the nationwide knowledge tells us.

The graphs beneath use current month-to-month reports from three sources to point out the worst dwelling worth declines are already behind us, and costs are appreciating nationally.

Taking a look at this month-to-month view, we are able to see the previous yr within the housing market might be divided into two elements. Within the first half of 2022, dwelling costs have been going up, and quick. Nonetheless, beginning in July, costs started to go down (proven in purple within the graphs above). By round August or September, the pattern began to stabilize. However, taking a look at the newest knowledge for early 2023, these graphs additionally present that costs are going up once more.

The truth that all three reviews present costs have been going up for 3 or extra straight months is an encouraging signal for the housing market. The month-over-month knowledge signifies a nationwide shift is occurring – dwelling costs are rising once more.

Craig J. Lazzara, Managing Director at S&P Dow Jones Indices, says this about dwelling worth traits:

“If I have been making an attempt to make a case that the decline in dwelling costs that started in June 2022 had definitively led to January 2023, April’s knowledge would bolster my argument.”

Consultants imagine one of many causes costs didn’t crash like some anticipated is as a result of there aren’t sufficient out there homes for the quantity of people that need to purchase them. Even with right this moment’s mortgage rates, there are extra folks seeking to purchase than there are properties out there on the market.

Mark Fleming, Chief Economist at First American, explains how extra demand than provide retains upward strain on costs:

“Historical past has proven that greater charges might take the steam out of rising costs, however it doesn’t trigger them to break down completely. That is very true in right this moment’s housing market, the place the demand for properties continues to outpace provide, maintaining the strain on home costs.”

Doug Duncan, Senior VP and Chief Economist at Fannie Mae, states dwelling worth development is exceeding expectations due to that prime demand:

“. . . housing costs proceed to point out stronger development than what was beforehand anticipated . . . Housing’s efficiency is a sworn statement to the power of demographic-related demand . . .”

Right here’s How This Impacts You

Patrons: In the event you’ve been holding off on buying since you have been apprehensive the worth of your property would go down, realizing dwelling costs have bounced again ought to convey you some reduction. It additionally provides you the chance to own one thing that often turns into extra valuable as time goes on.
Sellers: In the event you’ve been ready to sell your own home since you have been involved about how altering dwelling costs would have an effect on its worth, it could be a good suggestion to workforce up with a real estate agent to record your own home. You do not have to attend any longer as a result of the most recent knowledge suggests issues are delivering your favor.

Backside Line

In the event you delayed your transferring plans since you have been involved about dwelling costs dropping, the most recent knowledge reveals the worst is already over, and prices are appreciating nationally. Companion with a neighborhood actual property agent so you realize what’s taking place with dwelling costs in your space.

Reasons Your Home May Not Be Selling

With regards to promoting your home, you need three issues: to promote it for probably the most cash you may, to do it in a sure period of time, and to do all of that with the fewest hassles. And, whereas the present housing market is usually favorable to sellers resulting from at present’s limited housing supply, there are nonetheless components that may trigger delays and even stop a home from promoting.

In case you’re having hassle getting your house to sell in at present’s sellers’ market, right here are some things to consider.

Restricted Entry – If You Can’t Present It, You Can’t Promote It.

One of many largest errors you may make as a vendor is limiting the times and instances when patrons can view your private home. In any market, if you wish to maximize the sale of your home, you may’t restrict potential patrons’ potential to view it. Bear in mind, minimal entry equals minimal publicity.

In some instances, among the most motivated patrons might come from outdoors of your native space. As a result of they’re touring, they won’t have the luxurious to regulate their schedules when confronted with restricted choices to tour your home, so make it obtainable as a lot as doable.

Priced Too Excessive – Worth It To Promote, Not To Sit.

Pricing is a vital issue that may considerably impression your private home sale. Whereas it is tempting to push the value larger to attempt to maximize your revenue, overpricing can deter potential patrons and result in your private home sitting in the marketplace longer.

Jeff Tucker, Senior Economist at Zillow, notes:

“. . . sellers who worth and market their residence competitively shouldn’t have an issue discovering a purchaser.”

To not point out, patrons at present have entry to various instruments and sources to view obtainable properties in your space. If your home is priced unreasonably excessive in comparison with related properties, it might drive potential patrons away. Take heed to the suggestions your agent is getting at open homes and showings. If the suggestions is constant, it might be time to re-evaluate and doubtlessly decrease the value.

Not Freshened Up Earlier than Itemizing – If It Seems to be Good, It’ll Make a Good Impression.

When promoting your home, the previous saying “you by no means get a second probability to make a primary impression” issues. Placing within the work on the outside of your private home is simply as necessary as what you stage inside. Clean up your landscaping to enhance your private home’s curb enchantment so you may make an impression upfront. As an article from Investopedia says:

“Curb-appeal initiatives make the property look good as quickly as potential patrons arrive. Whereas these initiatives might not add a substantial quantity of financial worth, they may assist your private home promote sooner—and you are able to do a variety of the work your self to save cash and time.”

However don’t let that cease on the entrance door. By eradicating private objects and lowering litter inside, you give patrons extra freedom to image themselves within the residence. Moreover, a brand new coat of paint or cleansing the flooring can go a protracted approach to freshening up a room.

For all of these items, lean in your actual property agent for skilled recommendation primarily based in your distinctive scenario and suggestions you get from patrons all through the method.

Backside Line

If your home isn’t getting the eye you’re feeling it deserves and isn’t promoting within the timeframe you wished, it’s time to ask your trusted actual property agent for recommendation on what it’s possible you’ll have to revisit or change in your strategy. To get these skilled insights, join with an actual property skilled.

Two Questions To Ask Yourself if You’re Considering Buying a Home

In the event you’re considering of buying a home, chances are high you’re listening to nearly every thing you hear concerning the housing market. And also you’re getting your data from a wide range of channels: the information, social media, your actual property agent, conversations with buddies and family members, overhearing somebody chatting on the native grocery store, the record goes on and on. Most certainly, house costs and mortgage charges are developing so much.

To assist minimize via the noise and provide the data you want most, check out what the info says. Listed here are the highest two questions you’ll want to ask your self about house costs and mortgage charges as you make your determination:

1. The place Do I Assume Residence Costs Are Heading?

One dependable place you may flip to for that data is the Home Price Expectation Survey from Pulsenomics – a survey of a nationwide panel of over 100 economists, actual property consultants, and funding and market strategists.

In line with the newest launch, the consultants surveyed are projecting slight depreciation this 12 months (see the purple within the graph under). However right here’s the context you want most. The worst house worth declines are already behind us, and costs are literally appreciating again in lots of markets. To not point out, the small 0.37% depreciation HPES is exhibiting for 2023 is much from the crash some individuals initially stated would occur.

Now, let’s look to the longer term. The inexperienced within the graph under reveals costs have turned a nook and are anticipated to understand in 2024 and past. After this 12 months, the HPES is forecasting house worth appreciation returning to extra regular ranges for the following a number of years.

So, why does this matter to you? It means your house will probably grow in value and you need to achieve home equity within the years forward, however provided that you purchase now. In the event you wait, primarily based on these forecasts, the house will solely price you extra afterward.

2. The place Do I Assume Mortgage Charges Are Heading?

Over the previous 12 months, mortgage rates have risen in response to financial uncertainty, inflation, and extra. We all know primarily based on the newest studies that inflation, whereas nonetheless excessive, has moderated from its peak. That is an encouraging signal for the market and for mortgage charges. Right here’s why.

When inflation cools, mortgage charges usually fall in response. This can be why some experts are saying mortgage rates will pull again barely over the next few quarters and settle someplace round roughly 5.5 and 6% on common.

However, not even the consultants can say with absolute certainty the place mortgage rates might be subsequent 12 months, and even subsequent month. That’s as a result of there are such a lot of components that may impression what occurs. So, to present you a lens into the assorted doable outcomes, right here’s what you need to contemplate:

In the event you purchase now and mortgage charges don’t change: You made transfer since house costs are projected to develop with time, so no less than you beat rising costs.
In the event you purchase now and mortgage charges fall (as projected): You in all probability nonetheless made determination since you acquired the home earlier than house costs appreciated extra. And, you may at all times refinance your house afterward if charges are decrease.
In the event you purchase now and mortgage charges rise: If this occurs, you made an ideal determination since you purchased earlier than each the worth of the house and the mortgage charge went up.

Backside Line

In the event you’re serious about shopping for a house, you’ll want to know what’s anticipated with house costs and mortgage charges. Whereas nobody can say for sure the place they’ll go, skilled projections can provide you highly effective data to maintain you knowledgeable. Lean on a trusted actual property skilled who can add in an skilled opinion in your native market.

Expert Home Price Forecasts Revised Up for 2023

Expert Home Price Forecasts: Then and Now

A Look Forward To Get Ahead of the Next Headlines

Bottom Line

Why Median Home Sales Price Is Confusing Right Now

The Challenge with the Median Home Sales Price Today

Bottom Line

People Want Less Expensive Homes – And Builders Are Responding

People Are Spending Less on Newly Built Homes

Builders Are Offering Lower-Cost Options

How an Agent Can Help

Bottom Line

Home Prices Are Back on the Rise [INFOGRAPHIC]

Some Highlights

Housing Market Forecast for the Rest of 2023 [INFOGRAPHIC]

Some Highlights

Pricing Your House Right Still Matters Today

The value you set for your home sends a message to potential patrons.

Lean on a Skilled’s Experience to Value Your Home Proper

Backside Line

Don’t Fall for the Next Shocking Headlines About Home Prices

Why This Is So Essential to Perceive

Backside Line

Home Prices Are Rebounding

Right here’s How This Impacts You

Backside Line

Reasons Your Home May Not Be Selling

Restricted Entry – If You Can’t Present It, You Can’t Promote It.

Priced Too Excessive – Worth It To Promote, Not To Sit.

Not Freshened Up Earlier than Itemizing – If It Seems to be Good, It’ll Make a Good Impression.

Backside Line

Two Questions To Ask Yourself if You’re Considering Buying a Home

1. The place Do I Assume Residence Costs Are Heading?

2. The place Do I Assume Mortgage Charges Are Heading?

Backside Line

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