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Over the pandemic period, housing prices increased rapidly to unimaginable figures. However, in the past 2 months, the hot housing markets are beginning to cool as housing prices begin to slowly decelerate. Real estate experts have different opinions on how fast and how low housing prices will fall, while investors and buyers are trying to get a glimpse of the direction in which the market will go.
Buying a property is a major financial decision that requires planning. Trying to interpret the future in order to at least get some guidance on how to invest our finances makes sense. Even though we can’t be entirely sure how the market will look in the next few years, it makes sense to try and get it right. Regardless of what is to come, planning and looking far into the future are always good moves. So, what does the market have in store for us in the next five years? Let’s find out.
What the current market looks like
The housing demand is slowly going down, but the supply rates are still low. The low demand rates are due to the rising mortgage rates that are driving buyers out of the market. The mortgage rates have increased to 7%, which is high compared to the last two decades. According to info from Ofirio, the housing market experienced a major spike in some cities, with house prices increasing up to over 20% last year.
Despite the effort of the Federal Reserve to lower house prices by increasing the mortgage rates, buyers and sellers are still concerned about how high the mortgage rates have increased compared to the last years. According to Christopher Thornberg, the founding partner at Beacon Economics, the current market is stubborn, and it will take more than a 5% increase in interest rates to cool it down. With that, we leave it in the hands of the Federal Reserve to decide how high and how fast the rates will go up to balance the housing market without causing it to clash.
The predictions for the next 5 years
What is the outlook for the housing market in 2023 and so on? The forecast of the market for the next five years can be challenging because various outcomes might happen. However, some analysts have tried to interpret where the market is heading. According to Lawrence Yun, a chief economist for NAR, the United States is likely to face a 15% to 25% price increase within the next five years.
He explains that for the next year, there will be a drop in prices, which will soon start balancing out into 2024 and then be followed by consistent growth for the next few years, that is, 2025, 2026, and so on. It is clear that the decrease …….
