Unveiling the Future: 2023 Housing Market Spectacle – Trends, Predictions, and a Forecast You Can’t Miss

We are already halfway into 2023, but if you are interested in selling or buying a house this year, then you are probably already wondering what the housing market is going to be like in the next few months.

Will the rest of the year be a buyer’s or a seller’s market? And what about inventory? Will 2023 be the year that the US housing market crashes?

We have compiled this comprehensive guide to answer these real estate questions and many more. So let’s dive right in!                                           

How Are Home Prices Changing? 

House prices are always one of the first aspects buyers and sellers are concerned with, especially when entering a new year. 

To many of us, 2023 likely represents the first year of “normality” after the global pandemic wreaked havoc on our lives. So naturally, you might wonder whether the impending “normality” is also impacting the housing market.

Frustratingly, the picture that experts are painting could be rosier. House prices are not expected to change dramatically in 2023. Instead, continuous uncertainty and economic instability will likely characterize the next 12 months, at least according to the forecast offered by the Federal Reserve and other authorities in the fields of business, finance, and economics. 

In most markets, median sale prices in 2023 will very closely mirror or housing prices will drop lower than those of the past year. This means the sale-to-list ratio, the final sales price for a property compared to the final list price, is set to remain well below 100% throughout the next 12 months. This also means that the majority of houses will likely sell for less than the asking price. 

Looking at the current sale-to-list ratio is very important for both buyers and sellers, as it helps to better understand present home value as well as negotiate prices and close better deals.

Will 2023 be a Buyer’s Market or Seller’s Market?

Another consideration when discussing the housing market in 2023 touches on the eternal dilemma: will this year be a buyer’s market or a seller’s market?

Once again, the answer is less clean-cut than we hoped. In the United States, the 100 biggest housing markets will stay fairly neutral over the first few months of 2023, with a slight trend favoring sellers in the spring and one moving towards buyers in the summer. 

By the end of the year:

• 36 markets are expected to become buyers’ markets — much higher than the 14 markets in 2022
• 41 markets will remain sellers’ markets — slightly down compared to the 46 markets in 2022
• 23 markets will stay neutral

Tips for Buying in Today’s Market

Whether 2023 is the year you are finally going to secure your forever home or you already own a property but are looking to buy a second one, then you might be looking for expert advice on how to navigate today’s market. Whenever you’re buying, we recommend two key philosophies: 

• Set a budget and stick to it. Both housing prices and mortgage rates will remain fairly high in 2023. You might have to spend significantly more time searching and negotiating to keep yourself from blowing past your budget. 
• Be patient. Once you decide you’re ready to buy a house, it’s only natural to want to make it happen immediately. However, buying a house this year might take a little longer than you anticipated. Don’t rush things, work with a reputable realtor, and try to visit as many open houses as possible — provided they are within budget, of course.

When Should I Consider Buying a Home in 2023?

When buying a house, timing is key. While, of course, people can close great deals at any time of the year, it is also true that certain periods are more favorable to potential buyers. These are the times when you want to take action.

In 2023, the time to take action will be the end of the year — October, to be more precise.

The data comes from surveys conducted by ATTOM Data Solutions’ surveys and home sales information gathered from 2013 to 2021. 

October was the most promising time of the year, with median house price trends averaging $222,000 and premiums in the region of 3.3%. In comparison, for example, May is the worst month of the year, with average premiums of 10.5% over market value.

That said, timing isn’t the only consideration when purchasing a home. If you are in a position to begin your home hunt earlier in the year or you find a great deal, you don’t have to wait for fall. 

At the end of the day, buying a property is an extremely personal choice that you should feel confident making. 

Will Homes be More Affordable?

While the concept of affordability is, of course, very personal, we feel it’s still an important topic to cover when discussing the upcoming trends and expectations in the real estate housing market predictions.

Let’s first take a look at what happened in 2022.

Mortgage rates soared quickly, which meant that affordability overall decreased. After hitting the highest peak in June 2022, the S&P CoreLogic Case Shiller Index dropped by 3% in October, with average home prices expected to decrease by around 5.3% throughout the rest of this year — provided that mortgage rates remain as high as they are now.

This decrease in house prices may continue in 2024 and even 2025, but it will largely depend on how mortgage rates behave.

Tips for Selling in Today’s Market

Those interested in selling a property they own will be pleased to hear that demand is high, and the chances are good that they will find a great buyer with an appealing offer.

However, you need to do your research if you want to maximize your chances of securing the best buyer:

• Team up with an excellent listing agent. The right agent should have unbeatable local knowledge, a decent amount of years in the business, and a stellar reputation with many verifiable client testimonials and recommendations.
• Prepare your home for the upcoming sale. Whether the property needs major repairs or just some minor aesthetic work, everything must get done quickly, efficiently, and professionally before the house is listed.
• Arrange professional home staging. Having an expert team stage your home for the open house can drastically increase your chances of finding a buyer. Great home staging can showcase your property’s potential to any interested buyer, and is proven to significantly increase your chances of selling your property for the price you want.
  
  Professional home staging should cost about 1% of the property’s listing price and is particularly suitable for vacant homes. On the other hand, Lived-in houses can achieve similarly good results from simpler and more affordable DIY home staging, which can include decluttering, painting, and decorating some of the main living areas.

Will Housing Inventory Increase?

As you begin your house hunt in the next few weeks or months, you may soon realize that the available options are less plentiful than you hoped. That’s because housing inventory in 2023 will remain quite low, which means that demand for homes is higher than the actual number of properties for sale.

This applies both to existing homes and new builds. Nonetheless, experts argue that the situation might pick up slightly as we approach the end of the year, in a trend that mirrors the increase of home sales in December 2022 compared to the previous months of that year.

This forecasted rise in housing inventory should coincide nicely with the anticipated improvement in home affordability, confirming our estimation that the last quarter of 2023 will be the optimum time to buy. 

Naturally, overall housing inventory and house prices are still very different compared to pre-pandemic levels, meaning home shoppers will continue to encounter high costs and a supply of properties that still struggle to catch up with ever-increasing demand.

One note of caution, though, is for those exclusively interested in new builds, particularly in single-family homes. Industry experts believe that inventory for these properties might follow a different rising trend than we expect to see with existing homes.

Therefore, if these are the only types of properties that interest you, you should re-assess your expectations and follow our recommendations of setting a budget, working with a trusted realtor with excellent local knowledge, and, of course, being patient.

Will the Housing Market Crash this Year?

After everything we have discussed so far, what will the situation be like in 2023 for the housing market? First of all, let’s put your mind to rest: in all likelihood, the housing market outlook in the United States will not crash in the next few months.

Generally speaking, for a housing market to begin its decline, you should notice a substantial drop in property market forecast — at least 20 to 30% — coupled with a steady decrease in home sales and a sudden rise in foreclosure activity. Unfortunately, at present, none of these indicators are happening.

In fact, industry experts are predicting that the real estate bubble might correct itself from the unprecedented double-digit percentage rises that occurred in the past couple of years.

Experts can additionally point to several specific variables in 2023 that will keep the market stable: 

• Location. Cities, counties, and even entire states where median home prices have remained somewhat affordable — especially in relation to average income rates — may actually experience a surge in property sales and prices, as those markets become “hotter” compared to the rest of the country. 
• Homeowner Equity. Homeowners who came out of the 2008 financial crisis unscathed are now in a much more solid and secure position regarding home equity. This means that most homeowners own much of the value of their homes, which means that the market is fairly stable and very unlikely to crash.
• Mortgages. In the past few years, mortgages have become even stricter and more regulated, which helps to protect the overall real estate market from a possible crash. 

Therefore, the chances of a housing market crash in 2023 are extremely low, if not impossible.

The 2023 Housing Market Forecast

Whether you have plans to buy or sell a house this year, one thing is for sure: you are very likely to have many questions, doubts, and concerns. From wondering whether houses will be more affordable to deciding when to buy your first home, to figuring out what home staging is, to determining whether the housing market will crash in 2023, our comprehensive guide on housing market predictions for 2023 has covered a lot of ground. Hopefully, it has shed light on some of your most pressing concerns.

If you think 2023 will be your year in real estate, then FastExpert is here to help. Our easy-to-use platform helps both home sellers and buyers connect with the right real estate agent for their needs to make sure that they close their deals in the best possible way. 

With plenty of tips, content, and other resources, our website is your one-stop shop for all things real estate. So what are you waiting for? Look now, and see how we can help you on your real estate journey.