Real Estate Predictions for 2023 

 

For more than two years now, it seems like we have entered and been experiencing a period of price growth that has impacted every industry. Today let’s focus on real estate, as there are a lot of things that have changed, a change which has led to a lot of predictions made. 

 

Forecasting home prices – especially during a global pandemic – can be tricky, which is apparent by the wide range of forecasts available. Goldman Sachs sees home price appreciation averaging 2.7% in 2023 while Zillow is calling for 14.9% growth from March 2022 to 2023. 

 

 

Recent home price increases are a result of an imbalance in supply and demand that’s been decades in the making.

 

Speaking about the demand, a wave of millennials – the largest age cohort in the country – are nearing peak homebuying age. They’re establishing careers, having children, and are eager to buy their first homes.

 

In the supply corner, housing inventory was already suffering from a decade-plus of underbuilding following the mid-2000s housing market crash. As home values plummeted, builders slowed the rate of single-family home construction to a near-crawl and have been slowly ramping it up since. Then, the pandemic bogged down-home construction and made newly built homes more expensive.

 

With these economic conditions, will home prices drop in 2022-2023?

 

Unfortunately, chances are not. There are no quick fixes for the underlying economic forces driving up home prices in 2022-2023. 

 

While that may make home-buying more difficult, it also provides an all-but-guaranteed opportunity for several years of home appreciation for homebuyers that breakthrough.