Will Home Prices Drop in 2023? Our Predictions on Home Prices, Mortgage Rates, and More

The real estate market has never been as unpredictable as it stands right now. After a rocky few years of keeping up with the wild fluctuations of the market, everyone is trying to predict what’s next. 

Are interest rates going to keep climbing? Will prices ever come down? Are we expecting a crash as bad as 2008 with a recession looming over us? When will it be affordable again? 

As experts decipher what to expect in the real estate market in 2023, they agree that while homebuyers and renters are hoping for some financial relief in 2023, they will likely be disappointed.

But the market won’t take you for a wild ride this upcoming year. The dramatic swings and wild gyrations in the housing market are expected to taper off as the real estate ecosystem continues to slow.

Here are some of 2023’s market predictions according to Realtor.com:

What to Expect in the 2023 Housing Market

• While we anticipate home and rental prices will keep climbing next year, the increases will be much more modest than the huge surges seen earlier this year. 

• Mortgage interest rates, which have become the bane of many first-time and other buyers who can’t pay all in cash, will remain high. But they aren’t expected to substantially rise again.

• Sales are expected to continue falling as buyers simply can’t afford the onerous combination of towering home prices and high mortgage rates. Home and rental prices have been falling from their peaks over the summer, but they’re still rising year over year.

• Home prices are not expected to drop, despite higher mortgage rates.

• Realtor.com predicts that home prices will rise 5.4% year over year in 2023, with median monthly mortgage payments increasing by 28%.

• However, the market correction is expected to last through 2025, with slower growth and potentially dip in prices over the next few years.

• Mortgage rates are predicted to stay high at 7%, preventing many buyers from being able to afford a home. As a result, the number of homes sold is expected to decrease 13.8% year over year in 2022 and 14.1% in 2023.

Need Help Navigating in the New Year?

If you’re planning on buying or selling in the upcoming year and are unsure of how to proceed in this market, call us at the Mendel Group for a free consultation!

Not ready yet? Prepare yourself with our free Buyer Seminar and Seller Seminar.