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  • 2023-2024 Real Estate market forecast

    Friday, December 16, 2022   /   by Amy Brown

    2023-2024 Real Estate market forecast

    We are only two weeks away from a new year so it is time to make a plan for your real estate investments going into 2023. 

    I have referenced three expert sources to compare their housing predictions going into 2023-2024; Fannie Mae, Mortgage Bankers Association, and Realtor.com. Here is what they predict:

    *Note: These numbers are for the U.S. as a whole and not specific to the Asheville market

    2023 will be the hardest hit year:

    • Home sales will be reduced between 14-22% due to high interest rates.
    • Interest rates are expected to peak in Quarter 1 2023 at 7% or in the low 7s.
    • Instead of the 17% average home valuation annual gain, we are only expected to gain approximately 5.4% this year in value nationwide.
    • Median sales prices will take a dip to the high $300,000s in 2023 for resale homes and will be in the lower $400,000s for new construction.
    • Home prices are predicted to hold steady through 2024.
    2024 predictions:

    Home sales will rebound but not quite to the levels of 2020-2021. It is predicted to be an 18% inventory gain from the 2023 market but with interest rates remaining in the low 6%, sales will be more indicative of Quarter 4 2022. However, we should have a significant inventory increase as we head into a healthier economy, keeping sales prices steady, and bringing more buyers to the market as interest rates drop slightly.

    fannie mae housing-forecast-112022.jpgMortgage-Finance-Forecast-Nov-2022.jpg

    We are heading into a buyers market for 2023.

    Overall in 2023,1 Realtor.com®forecasts that buyers and sellers can expect:

    • Average mortgage rates of 7.4%, with early 2023 hikes followed by a slight retreat to 7.1% by year-end.
    • Home sales prices won't come down, but growth will moderate to a single-digit yearly pace (+5.4%) for the first time since 2020.
    • Rents (+6.3% year-over-year) will outpace home prices and likely hit new highs, further adding to budget pressures – especially for first-time buyers.
    • An increase in existing homes for sale (+22.8% year-over-year), as the inventory refresh that began last summer accelerates.
    • Home sales will decline 14.1% year-over-year to 4.53 million, the lowest level since 2012 
    • Areas that will sustain the most noticeable hits will be resort areas and the largest U.S. metros which have seen the most drastic price increases over the last 3 years. 
    My predictions for the Asheville market:

    As we are considered a resort area with an average home valuation growth of 22-25%, I predict that we will see a significant slow in real estate sales for 2023. Because of the slower rate of growth in home values, I believe that we will see a further drop in resale and new construction inventory market-wide. Because of the reduction in inventory we won't see drastic price cuts but we will see reductions in Quarters 1 and 2 of 2023 and then stabilization as the year progresses. 

    I predict that our market will see an influx of cash buyers that are not dependent upon interest rates and will take advantage of the market decline in order to lock in unique or luxury properties; such as, downtown condos, historic district homes, or waterfront homes. 

    I predict an increase in demand as we go into the summer months for lakefront properties in areas like Nebo and Lake Lure, Mountain View homes, farms and large acreage parcels with a decline in demand for suburban family homes. 

    Prices will stabilize as 2023 reverts to a cash market with luxury homes being the most sought after. 2023 will be a solid buyers market. 

    We will return to a more neutral market in 2024 with a more even playing field across the board for buyers and sellers alike. 

    If you are planning to make a real estate investment...2023 is the year to do it. We will not see interest rates return to the 3% margin for years to come.