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Leaves will fall. Housing prices won’t, experts predict

September 18, 2023

By Brianna Crane

Optimistic experts predicted the housing market would be better for buyers in 2023, but a lack of supply and record-high mortgage rates have forced would-be buyers to the sidelines.

What’s happening: More Americans than ever think it’s a bad time to buy, according to a recent Gallup survey. The percentage hasn’t been this high since Gallup started asking the question in 1978.

The good news: Home prices have moderated in most major U.S. markets.

  • National home prices rose 3% from August 2022 to 2023, per Redfin data.
  • Context: From August 2020 to 2021, when mortgage rates were significantly lower, they rose a whopping 16.1%.

Here’s where experts predict we’re headed this year.

Mortgage rate madness, continued

What they’re saying: Mortgage rates soared past 7% this summer, and “they’re unlikely to fall in a meaningful way,” Bankrate chief financial analyst Greg McBride tells Axios.

What’s next: It’s possible we dip back in the high 6s, but that won’t be enough for sellers to list, he says.

The bottom line: Mortgage rates will likely start to decline when inflation falls, experts say.

Buy vs. rent debate

What they’re saying: “In almost every single metro, it’s more affordable [to rent] than to own,” Redfin chief economist Daryl Fairweather tells Axios.

  • There are some outliers, including Detroit, Cleveland, Philly and Houston, she says.

What’s happening: Renters are largely at a point where they’re settled, “and rents are starting to reflect that” by stabilizing, Apartment List chief economist Igor Popov tells Axios.

What’s next: In many cities, supply has improved as apartment construction has increased, making way for (slightly) better rent deals this season.

When to buy

What they’re saying: “This is not a good time to buy a house if you have the luxury of waiting,” McBride says. Housing selection is poor and the cost to borrow is high, he says.

Yes, but: Fall is one of the best seasons for buyers each year. There’s less competition than in spring and more inventory than in winter.

  • In winter, there’s typically lower inventory, but you may find better deals.
  • Competition and supply typically heat up again heading into spring. So you’ll have more options, but more competitors.

What we’re watching: Supply. “Affordability is going to continue to deteriorate,” Fairweather predicts, noting the persistent inventory crunch. See More

 

More great articles to read below:

  • RE/MAX settles buyer broker commission lawsuits for $55 million

  • Mortgage demand stalls at a level not seen since 1996

  • Barbara Corcoran Says Housing Prices ‘Are Going To Go Through The Roof’: Here’s When

  • US homebuyers are waiting for the Fed to start cutting interest rates. Here’s when 9 experts say it’s going to happen.

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