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 priceshave risen at an unsustainable rate, leaving many to wonder how long it would last. If youre asking yourself:whats ahead for the price of my home,know that experts are now answering this question, and its welcome news for homeowners who may have been led by the media to believe their home would lose value.
Historically, home prices have appreciated at a rate near4%. For 2023, the average of six major 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 they project home prices are going in the coming year.
To understand why experts are calling for appreciation next year, look to the economics of supply and demand. Dave Ramsey, Financial Expert,saysthis:
The root issue of what drives house prices almost always issupply and demand . . .
Two things are driving home prices upward. First, theundersupplyof homes on the market is an issue we continue to face in this country. We still dont haveenough homeson the market for thenumber of peoplethat want to buy them. To further that point, were still in asellers marketnationally, and in that scenario, home prices tend to appreciate.
Second, millennials are moving through their peak homebuying years. Since theyre the largest demographic behind the baby boomers, demand isnt going away any time soon.
Bottom Line
Experts are calling for home prices to appreciate next year, although at a slower pace than the previous three years. The reason for this is simple. The dynamics of supply and demand are playing out in real estate and will continue for many years to come.
