There is light at the end of the tunnel hopefully for potential homebuyers. According to professionals in the industry, the trends are shooting toward more affordability.
“Americans finding ways to make payments on a roof over their heads will drive the market next year,” says Zillow chief economist Skylar Olsen. “Affordability is going to be the biggest factor in housing for 2023, but there’s room for optimism on that front if mortgage rates recede.”
Those in the industry have five housing market predictions for 2023.
1. Housing affordability will improve slightly
Those in the industry say there are signs of both the home inventory and monthly mortgage cost will stabilize. Home values should not go down, but they will not keep skyrocketing to space. In fact, national home prices are predicted to remain flat, and they may even fall in some areas.
Inflation is showing some signs of easing up and mortgage rates are starting to also dip. The mortgage rates will continue to go up and down which can cause stress to the housing market.
2. The Midwest will grow in demand
The Midwest has not seen the home price increases like many of the other regions in the US. Professionals believe that this will attract homebuyers to the Midwest. Places like Iowa, Missouri, Illinois, Kansas, and Ohio have more affordable homes.
The mortgage-to-income ratios in many Midwest cities such as St. Louis, Missouri, and Toledo, Ohio, make them the perfect place for first-time homebuyers. There are also more sellers willing to list right now in these areas which mean there is more inventory than in most regions.
3. More friends and family will buy homes together
According to Zillow, 18% of homebuyers have purchased with a friend or a relative who was not a spouse. Buying with someone else helps with your debt-to-income ratio and helps with a larger down payment. The seller’s market has pushed buyers into thinking creatively.
4. New construction buyers may have more choice — and even bargains
Builders’ sentiment is rising and it is leading to more homes being built. A rise in new construction can mean better discounts for potential home buyers. It is reported that new homes under construction are up 50% since February 2020.
5. More homeowners may leverage their home as a source of income
Rental prices are rising higher right now than home values. This means that your home could net you income by renting it. Your rental income will more than likely be higher than your mortgage payment.
In a 2021 survey of home buyers, one-third said they were purchasing just to rent out the home. The record low mortgage rates in 2020 and 2021 made it easier to purchase second homes as income producers. If you are worried about finding a renter for a home, Zillow Rental Manager is your solution. Zillow Rental Manager allows you to screen tenants and collect rent payments. You can post your rental online and on the app for free.
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