Zillow already has its predictions for 2023 and expects the affordability crisis to stabilize, with a very active market in the Midwest and with more friends and family pooling their money to buy houses together.
With 2023 just around the corner, Zillow has released its forecasts for homebuyers. And after a year that became difficult to buy a house, it is best to know how the market will come to increase the chances of brand new housing.
“Affordability will be the most important factor in housing by 2023, but there is room for optimism on that front if mortgage rates decline,” said Skylar Olsen, Zillow’s chief economist. “Americans finding ways to make payments on a roof over their heads will drive the market forward next year. Where costs are lower, we will see healthier levels of sales and inventory. If rent is less expensive than a new mortgage, we will be seeing increased demand for rentals, something builders and owners understand.”
The 5 points that will mark the housing trend in 2023, according to Zillow:
1. The Midwest market will be very active
Prices in most Midwestern metropolitan areas have not risen as much as in most other regions of the country. Mortgages maintain reasonable prices compared to income in Missouri, Kansas, Iowa, Ohio and smaller metropolitan areas in Illinois, allowing first-time homebuyers to take the plunge. Additionally, this area has homes available to choose from, which is another key component of a healthy market.
2. More friends and family will pool their money to buy a house
As more millennials and Gen Zers enter what will remain a historically expensive market in 2023, more people are turning to pooling their money to buy a home. Property chasers are turning to unconventional means to do so financially, and this should increase in 2023. Zillow notes that of potential homebuyers, 19% intended to buy with a friend or family member in the next 12 months. .
3. The affordability crisis will stabilize
By 2023 Zillow anticipates the market should stabilize, making it possible for households to budget and plan for upcoming housing decisions in the months and years ahead. Mortgage rates are seeing recent, encouraging progress to the downside, as inflation and a tight labor market show some small signs of relief. On the other hand, rents fell during the month of October for the first time in two years, indicating a return to regular seasonal patterns.
4. The strength of construction will be in rents
The large number of houses currently under construction after the pandemic boom (still up 50% since February 2020) will mean continued deliveries to the market. The temporary glut of available new homes will drive price reductions for new construction. On the other hand, multi-family unit builders are much more optimistic, which will encourage more rental construction, as many prospective homeowners will need to continue renting later in life if they are currently unable to qualify and move forward with the development. buying your own home.
5. Expect an increase in purchases from first-time owners
The record low mortgage rates of 2020 and 2021 allowed the leverage of a lifetime, so homeowners can invest in a second home. 34% of buyers surveyed by Zillow in 2021 said the opportunity to rent out their entire home was an important reason to buy, up from 27% in 2018 and 28% in 2019. Regular income potential, bearish expectations for Stock markets in 2023 and the big pushback from homebuyers due to higher mortgage rates may reinforce the incentive to hold on to those investment properties, especially when rental income right now is particularly high.