The housing market is extremely volatile and constantly changing. To keep up with the changes, agents, owners, and investors rely on real estate statistics to help them understand the market and make the right decisions.
This data-based intuition is helpful when looking for a home, listing a house, selling a property, or guiding a customer in this trade. To understand the current state of the market, we have put together the most critical real estate statistics. Let’s have a look!
- Property Prices Will Fall
The housing market was scorched during and after the pandemic, with housing prices rising by 10%. However, for the past few months, housing prices have fallen at a controlled rate. With the increase in mortgage rates, real estate experts like Ofirio predict that housing prices will continue to fall in 2023. According to Morgan Stanley, a real estate expert, these prices are expected to drop by 10%.
However, the situation cannot be compared to the 2006–2012 housing market, which experienced a 27% drop. According to other sources, prices will fall by 4%, bringing the median price of a home in 2023 to $368,000. However, this price is high compared to 2019, before COVID-19. Even with the fall in prices, the predicted high-interest rates and monthly mortgage payments still make homes unaffordable compared to 2019.
- The Mortgage Applications Are Slowing Down
According to data presented by the Mortgage Bankers Association, the rate of mortgage applications has decreased by 1.9% compared to the previous month. The rate of mortgage applications is an indicator of how hot the housing market is and how many people are looking to invest in it.
However, due to the high-interest rates, statistics show that potential buyers and investors are staying put, thus reducing the current demand for mortgages. These potential investors are likely waiting for interest rates and housing prices to decrease much further or have ventured into other investment opportunities.
- Home Sales Will Decrease Compared to 2022
Several real estate firms have made their predictions for 2023. According to the data presented, the percentage of home sales in 2023 is likely to drop by 16% compared to last year.
According to the predictions, this challenge will be brought about by high mortgage rates, which reduce potential buyers. Apart from high rates, a possible recession contributes to low demand. Unlike the pandemic years, this year presents unaffordable rates. Thus, people will not be so eager to move and buy houses.
- The Mortgage Rates Are Likely to Drop
Despite the increase in mortgage rates currently, statistics show that the rates will drop to about 5.8% in the coming months. This means a person buying a $400,000 house will save approximately $150 on monthly mortgage payments. Things will be even better for buyers who have been saving to buy bigger homes.
If the house prices fall while the interest rates are low, one can purchase their dream home easily. Also, investors who want to get into the housing market in 2023 will find these conditions to be ideal. However, these statistics are simply not guaranteed.
- The Demand for Homes in Rural Areas Will Rise
With many people embracing the art of working from home, the demand for houses away from the noise and bustle of the cities is likely to increase even more in 2023. The pandemic allowed people to enjoy working in quiet and green environments, thus triggering an interest in homes situated in areas outside the city.
- An Economic Recession Is Unlikely
With the Fed raising interest rates, people are worried that the economy will face a recession. We cannot accurately predict what is likely to happen in 2023, but from what we have witnessed, 2022 took everyone by surprise. However, we must focus on how the high-interest rates might affect the economy.
The Fed’s goal has been to balance the rate of demand and supply. It is worth mentioning that the labor market has so far remained resilient and has prevented us from witnessing an economic recession.
However, due to the high mortgage rates, the economy will take a hit as most homeowners struggle to pay their high mortgage payments. This will therefore force them to cut their monthly budget.
Bottom Line
If you are interested in investing in the real estate market, then 2023 is probably the best year for you. However, you need to pay attention to whether the economy will likely face a recession within the early months of 2023.
Moreover, you should take time to understand the real estate statistics of the area you wish to invest in if you are to make informed decisions on the right property to buy.
