Experts are starting to make their 2023 home price forecasts. As they do, most agree homes will continue to gain value, just at a slower pace. Over the past couple of years, home prices have risen at an unsustainable rate, leaving many to wonder how long they will last. If you’re asking yourself: what’s ahead for the cost of my home? Know that experts are now answering this question and it’s welcome news for homeowners who the media may have led to believe their home would lose value.
Historically, home prices have appreciated at a rate near 4%. For 2023, the average of six significant forecasters noted below is 2.5%. While one, Zelman & Associates, is calling for depreciation, the other five are calling for appreciation. The graph below outlines each expert forecast to show where their project home prices are going in the coming year.
To understand why experts are calling for appreciation next year, look to supply and demand economics. Dave Ramsey, Financial Expert, says this:
“The root issue of what drives house prices almost always is supply and demand . . .”
Two things are driving home prices upward. First, the undersupply of homes on the market is an issue we continue to face in this country. We still don’t have enough homes on the market for the number of people that want to buy them. To further that point, we’re still in a sellers’ market nationally, and in that scenario, home prices tend to appreciate.
Second, millennials are moving through their peak homebuying years. Since they’re the most significant demographic behind the baby boomers, demand isn’t going away soon.
Experts are calling home prices to appreciate next year, although at a slower pace than the previous three years. The reason for this is simple. Supply and demand dynamics are playing out in real estate and will continue for many years.