2023 Housing Predictions (November 2022)

Introduction:

The real estate market is constantly evolving, and accurate home price forecasts are essential for buyers, sellers, and industry professionals to make informed decisions. In this blog post, we will delve into the revised home price forecasts for 2023, considering predictions from major forecasters, including Zelman & Associates and big banks like Wells Fargo. By examining these forecasts and understanding the factors that influence them, we aim to provide valuable insights into the current state and potential future trends of the housing market.

Graphic 1: Revised Home Price Forecasts for 2023 According to the latest updates, three out of the six major forecasters are predicting minimal appreciation in home prices for 2023. This indicates a relatively stable market with slight price increases. On the other hand, two forecasters anticipate minimal depreciation, suggesting a cautious outlook. Notably, Zelman & Associates stands out with their projection of a 5.1% depreciation in home prices. It is worth mentioning that Zelman had previously predicted depreciation, and this forecast aligns with their earlier predictions.

Current Market Position: While home prices have experienced a decline, it is important to note that the market is still ahead compared to the start of 2022. Despite the revisions in forecasts, the overall market sentiment is not as gloomy as some might anticipate. The most pessimistic prediction among the six forecasters suggests a 5% depreciation, indicating that a significant downturn is not expected.

Graphic 2: Big Banks' Perspective on Home Price Forecasts Large banks have a particular focus on publicly traded builders, who may experience greater challenges in terms of the prices they can command for new construction. Consequently, their forecasts often reflect a more cautious outlook, with a leaning towards depreciation. These predictions, however, are more relevant to the builders themselves and may not directly impact individual buyers or sellers.

Insights from Wells Fargo: Wells Fargo, one of the prominent banks in the real estate industry, predicts a 5.5% drop in home prices for 2023. However, their forecast also includes a 3.1% bounce back in prices expected for 2024. This suggests that while a temporary decline is anticipated, the market may start to regain strength in the following year. It is important to consider such long-term projections when making decisions regarding home purchases or sales.

Conclusion: Understanding home price forecasts for 2023 provides valuable insights into the dynamics of the real estate market. While some forecasters predict minimal appreciation, others anticipate minimal depreciation, with Zelman & Associates offering the most pessimistic projection of a 5.1% depreciation. The opinions of big banks should be taken into account, considering their focus on publicly traded builders who may face larger price drops for new construction. Wells Fargo, for instance, forecasts a 5.5% drop in prices for 2023, followed by a 3.1% recovery in 2024. Ultimately, these forecasts provide valuable information for buyers, sellers, and industry professionals, helping them navigate the real estate market with greater awareness and understanding.