{"id":2598,"date":"2022-11-18T07:06:47","date_gmt":"2022-11-18T12:06:47","guid":{"rendered":"https:\/\/www.deeds.com\/articles\/?p=2598"},"modified":"2024-04-25T23:18:12","modified_gmt":"2024-04-26T03:18:12","slug":"home-prices-will-fall-but-affordability-dont-count-on-it","status":"publish","type":"post","link":"https:\/\/www.deeds.com\/articles\/home-prices-will-fall-but-affordability-dont-count-on-it\/","title":{"rendered":"Home Prices Will Fall. But Affordability? Don\u2019t Count on It"},"content":{"rendered":"\n
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What\u2019ll this market do in 2023? Economists envision home prices dropping throughout the year. A report from the research firm Capital Economics predicts an 8% drop, which is in the range others are predicting, too.<\/p>\n\n\n\n

Then, its forecast shows property values rising back up again \u2014 by 2.5% in late 2024.<\/p>\n\n\n\n

Morgan Stanley analysts believe prices will fall 7% by December 2023 from their June 2022 highs. Moody\u2019s Analytics expects a 10% drop by mid-2024 \u2014 and drops much bigger than that in the markets that went red-hot. Consider Austin, Texas<\/a>, where prices are up 60% since the pandemic began. As high as that figure is, it\u2019s sliding. Since summer 2022, Austin property values are already down more than 8%.<\/p>\n\n\n\n

Overall, this seems like a reprieve for hopeful buyers. But will it bring what we really need: many affordable homes for sale?  <\/p>\n\n\n\n

Here\u2019s what current forecasts show.<\/p>\n\n\n\n\n\n\n\n

A Dip, Not a Crash, in Property Values Is Coming<\/h2>\n\n\n\n

Most everyone expects to witness home values going down in 2023. But this is happening within a very challenging context. Lenders are nervous about home buyers\u2019 ability to make payoffs as long as there is some chance of a recession. And because the mortgage loan gatekeepers are being exceptionally strict, buying won\u2019t get much easier, if at all. The younger generations have a lot of hopeful buyers, but if they cannot get approved for a mortgage, they can\u2019t buy homes.<\/p>\n\n\n\n

Plus, as we all know, mortgage rates have risen quickly in the past few months. This factor alone increased the typical monthly mortgage borrower\u2019s debt by some $800 per year. It\u2019s just enough to dampen mortgage loan demand.<\/p>\n\n\n\n

So, sales are slowing down. By some accounts, they\u2019re down as much as 30% over the past year. At least the era of bidding wars is largely over, the Capital Economics report observes \u2014 shifting \u201cmarket power\u2026 from sellers to buyers.\u201d<\/p>\n\n\n\n

Maybe so, but there\u2019s still a serious supply shortage. And sellers who bought during a period of extremely low mortgage rates will not be comfortable moving out of their homes now. Especially if there\u2019s a dip in pricing.<\/p>\n\n\n\n

Mortgage Rates Reach a Plateau<\/h2>\n\n\n\n
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The current 7% mortgage rates could stay at the same level through most of 2023. Maybe slight dipping, but not too much, analysts say. Combine that with a very<\/em> costly current real estate market. What does it all mean, in real-life terms?<\/p>\n\n\n\n