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What is the Future of Home Prices?

Saturday, October 22, 2022   /   by Laura Larson

What is the Future of Home Prices?

Home price appreciation is slowing down along with the cooling of the housing market as a result of the sharp increase in mortgage rates. And if you keep up with the news headlines, you'll definitely notice a wide spectrum of perspectives advocating for everything from continuing appreciation to plummeting property values. But what is real? What is most likely to occur in the future?

Though perspectives vary, it seems most likely that we will end up somewhere between a slight appreciation and a slight depreciation. Here are the most recent professional forecasts so you can make the best decision today.

What Experts Say Will Happen to Home Prices in the Following Year
The list below shows the most up-to-date forecasts from five experts in the housing industry. These are the experts that have most recently updated their projections based on current market trends:

0.2% - Average in all Forecasts
MBA - 2.8%
HPES - 2.6%
NAR - 1.2%
Fannie Mae - -1.5%
Zelman - -4.0%

As the list shows, the three positives represent experts calling for ongoing home price appreciation, just at a more moderate rate than in recent years. The negative is experts calling for home price depreciation.

Although there isn't a clear consensus, if you average all five of these predictions, the most likely result is that home price growth will be about stable nationwide next year.

Why Does This Matter?
Basically, opinions among experts on what is ahead for 2023 differ. Home prices will probably increase in some markets while decreasing modestly in others. It all relies on the circumstances in your local market, including how heated it was recently, the amount of inventory on hand, the desire of buyers, and more.

The good news is that home price appreciation is anticipated to shortly return to more normal levels. According to Wells Fargo's most recent prediction, prices would likely decline in 2023 but rebound and turn net positive in 2024. That prediction predicts a 3.1% increase in value in 2024, a figure far closer to the long-term average of 4% yearly growth.

In addition, the Home Price Expectation Survey (HPES) from Pulsenomics, a survey of more than 100 business experts, predicts continued growth of between 2.6 and 4% from 2024 to 2026. This proves that even if prices drop marginally in the upcoming year, it is unlikely to be a long-lasting trend.

According to Parcl's co-founder and chief data officer, Jason Lewis: “In the absence of trustworthy, up-to-date information, real estate decisions are increasingly being driven by fear, uncertainty, and doubt.”

Never let worry or uncertainty interfere with your plans. Reach out to a local real estate expert for the support you require at each stage of the process if you're uncertain about the direction that prices are taking or how to make sense of what is happening in the current home market.

Bottom Line
The housing market is in transition right now, and it might be perplexing. Leaning on Laura Larson to guide you in making sure-footed and knowledgeable decisions about what's occurring in your industry is the greatest approach to handle that transformation.