What home prices will look like in 2023, according to Fannie Mae
Before the start of 2022, many in the real estate industry believed that home prices would decelerate in growth this year. The latest real estate firm to change up its 2022 forecast was Fannie Mae. Last year, the agency predicted that the average home price would climb 7.9% year, and now Fannie Mae is reporting an 11.2% price jump. If home prices rise to that level, it would mark a deceleration from the current rate. Fannie Mae believes the relief from the market will come, but it just won’t happen until the end of 2022 going into 2023.
For most of the pandemic, supply has been an issue. Many believed housing inventory would increase. However, housing availability levels have only gotten worse. Fannie Mae is now stating the median home price in 2022 will jump from $355,000 to $384,000. Inflation has been hitting consumers hard as prices rise at the fastest rate in nearly 4 decades. Mortgage rates are spiking as inflation rises as well.
Though our current economic market does not look promising, there is still hope for a cool-down period in the housing market. Hopefully, with higher rates, the market will become less competitive. If that happens, home growth could finally become normal again, or as close to normal as possible, given our current climate. If buyers are being priced out, then there should be fewer bidding wars which should slow house price appreciation. This is believed to begin at the start of 2023. This cooldown will not be like it was when the market crashed in 2008. Instead, we should expect to see fewer bidding wars and high-stakes competition. Home prices will continue to surge, which is not great news for first-time buyers, but from a macro perspective, a strong housing market could be what the United States needs to evade a potential recession.
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