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What’s Ahead for Home Prices?

As the housing market responds to the dramatic rise in mortgage rates, home price appreciation is cooling as well. If you’re following headlines in the media, you’re probably seeing a wide range of opinions calling for everything from falling home prices to ongoing appreciation.

But what’s true? What’s most likely to happen moving forward?

While opinions differ, the most likely outcome is we’ll fall somewhere in the middle of slight appreciation and slight depreciation. Here’s a look at the latest expert projections so you have the best information possible today.

What the Experts Are Saying About Home Prices Next Year

The graph below reflects the most up-to-date forecasts from five housing industry expert, who have most recently updated their projections based on current market trends:

The three blue bars represent experts calling for ongoing home price appreciation, just at a more moderate rate than we have seen in recent years. The red bars on the graph are experts calling for home price depreciation. While there isn’t a clear consensus, if you take the average (shown in green) of all five of these forecasts, the most likely outcome is, nationally, home price appreciation will be fairly flat next year.

What Does This Mean?

Experts are divided on what’s ahead for 2023. Home prices will likely depreciate slightly in some markets but continue to gain ground in others. It all depends on the specific location (city, neighborhood, school district etc.) and buyer demand vs. supply of current inventory levels in each micro market.

The good news is that home prices are expected to return to more normal levels of appreciation rather quickly. The latest forecast from Wells Fargo shows that, they think prices will recover and net positive in 2024. That forecast calls for 3.1% appreciation in 2024, which is a number much more in line with the long-term average of 4% annual appreciation. And the Home Price Expectation Survey (HPES) from Pulsenomics, a poll of over one hundred industry experts, also calls for ongoing appreciation of roughly 2.6 to 4% from 2024-2026. This goes to show, even if prices decline slightly next year, it’s not expected to be a lasting trend.

As Jason Lewris, Co-Founder and Chief Data Officer for Parcl, says:

“In the absence of trustworthy, up-to-date information, real estate decisions are increasingly being driven by fear, uncertainty, and doubt.”

Don’t let fear or uncertainty change your plans. If you’re unsure about where prices are headed or how to make sense of what’s going on in the local housing market, reach out to me for the guidance you need each step of the way. I am here to help!


Content by Nina Brown Alameda Realtor

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