What’s Ahead for Home Prices?

As the housing market cools in response to the dramatic rise in mortgage rates, home price appreciation is cooling as well. And if you’re following along with headlines in the media, you’re probably seeing a wide range of opinions calling for everything from falling home prices to ongoing appreciation. But what’s true? What’s most likely to happen moving forward?

While opinions differ, the most likely outcome is we’ll fall somewhere in the middle of slight appreciation and slight depreciation. Here’s a look at the latest expert projections so you have the best information possible today.

What the Experts Are Saying About Home Prices Next Year

The graph below shows the most up-to-date forecasts from five experts in the housing industry. These are the experts that have most recently updated their projections based on current market trends.

As the graph shows, the three blue bars represent experts calling for ongoing home price appreciation, just at a more moderate rate than in recent years. The red bars on the graph are experts calling for home price depreciation.

While there isn’t a clear consensus, if you take the average (shown in green) of all five of these forecasts, the most likely outcome is, nationally, home price appreciation will be fairly flat next year.

What Does This Mean?

Basically, experts are divided on what’s ahead for 2023. Home prices will likely depreciate slightly in some markets and will continue to gain ground in others. It all depends on the conditions in your local market, like how overheated that market was in recent years, current inventory levels, buyer demand, and more.

The good news is home prices are expected to return to more normal levels of appreciation rather quickly. The latest forecast from Wells Fargo shows that, while they feel prices will fall in 2023, they think prices will recover and net positive in 2024. That forecast calls for 3.1% appreciation in 2024, which is a number much more in line with the long-term average of 4% annual appreciation.

And the Home Price Expectation Survey (HPES) from Pulsenomics, a poll of over one hundred industry experts, also calls for an ongoing appreciation of roughly 2.6 to 4% from 2024-2026. This goes to show, even if prices decline slightly next year, it’s not expected to be a lasting trend.

As Jason Lewris, Co-Founder and Chief Data Officer for Parcl, says, “In the absence of trustworthy, up-to-date information, real estate decisions are increasingly being driven by fear, uncertainty, and doubt.”

Don’t let fear or uncertainty change your plans. If you’re unsure about where prices are headed or how to make sense of what’s going on in today’s housing market, reach out to a local real estate professional for the guidance you need each step of the way.

Bottom Line

The housing market is shifting, and it’s a confusing place right now. Let’s connect so you have a trusted real estate professional to help you make confident and informed decisions about what’s happening in our market.

Millennials Are Still a Driving Force of Today’s Buyer Demand

If you’re thinking about selling your house but wondering if buyers are still out there, know that there are still people who are searching for a home to buy today. And your house may be exactly what they’re looking for.

While the millennial generation has been dubbed the renter generation, that namesake may not be appropriate anymore. Millennials, the largest generation, are actually a significant driving force for buyer demand in the housing market today. Here’s why.

Millennial Homebuying Power

While there’s no denying higher mortgage rates are making it more challenging to afford a home today, many millennials are still eager and able to buy homes – whether it’s their first or they’re moving up. That’s in large part because of the value they place on education.

A recent article from First American says millennials may be the most educated generation in our nation’s history. Because of that, they tend to earn higher wages, and that translates to greater homebuying power. Odeta Kushi, Deputy Chief Economist at First American, explains, “In 2020, millennials with a bachelor’s degree had a median household income of over $100,000, while those with at least a graduate degree had a median household income of over $120,000. Compare those income levels with the median household income of millennials with just a high school degree (or some college) of $60,000 and the earning power benefits of higher education are undeniable. . . . Millennials’ pursuit of higher education is good news for the housing market. . . because education is the key to unlock both greater earning power and, in turn, homeownership.”

And since wages are one of the key things that factor into affordability when it comes to buying a home, these higher earnings can help millennials achieve their homeownership goals.

Millennials Continue To Be a Driving Force of Demand

A number of studies have looked into how the millennial generation views homeownership and how they’re uniquely positioned to define the housing market moving forward. As the largest generation, the volume of potential millennial homebuyers will have an impact on the market for years to come. As an article in Forbes explains, “At about 80 million strong, millennials currently make up the largest share of homebuyers (43%) in the U.S., according to a recent National Association of Realtors (NAR) report. Simply due to their numbers and eagerness to become homeowners, this cohort is quite literally shaping the next frontier of the homebuying process. Once known as the ‘rent generation,’ millennials have proven to be savvy buyers who are quite nimble in their quest to own real estate. In fact, I don’t think it’s a stretch to say they are the key to the overall health and stability of the current housing industry.”

If you’re thinking of selling your house but are hesitant because you’re worried that buyer demand has disappeared in the face of higher mortgage rates, know that isn’t the case for everyone. While demand has eased this year, millennials are still looking for homes. As Mark Fleming, Chief Economist at First American, says in an article, “While not the frenzy of 2021, the largest living generation, the Millennials, will continue to age into their prime home-buying years, creating a demographic tailwind for the housing market.”

Bottom Line

Millennials are interested in and well-positioned to achieve their homeownership dreams. If you’re ready to sell your house, know that it may be just what they’re looking for.

Top Sales for October 2022 in Coastal Boca Raton

The top two sales from October 2022 in the coastal Boca Raton market were both from Royal Palm Yacht & Country Club. Our top sale was a new construction, stunning 8,000+ sqft waterfront modern estate home that traded for $25,750,000 or over $3,000 per sqft. Our other Royal Palm home traded for $6.M or $1,031 per sqft - much closer to the average price per square foot for the area. The majority of homes from the top ten were on the market in less than 10 days, showing the velocity of our local real estate market continues to outpace historical averages. 40% of the homes on the list are oceanfront condos, including two from buildings built in the 1970s. The majority of the homes on our list are smaller in size, with three and two-bedroom offerings dominating 70% of the list. There are 182 luxury homes listed on the market on the MLS (Multiple Listing Service) as of November 2, 2022, with 36 coming to market in the last 30 days; a 20% increase over the same period last year.

As we approach the high season, we expect to see the number of homes coming to market increase as well as the number of sales each month. If you are considering listing your home, call or text me for a confidential conversation.

500 E Alexander Palm Road
5  beds |  7 baths | 8,287 sq. ft.
$25,750,000

2296 Acorn Palm Road
5 beds | 5.5 baths | 6,203 sq. ft.
$6,400,000

200 SE Mizner Blvd E 707
2 beds | 3.5 baths | 2,718 sq. ft.
$3,450,000

775 NE 39th Street
3 beds | 3.5 baths | 2,600 sq. ft.
$3,076,844.95

1 N Ocean Blvd 506
2 beds | 2.5 baths | 3,088 sq. ft.
$2,400,000

500 S Ocean Boulevard 2101
2 beds | 2 baths | 1,479 sq. ft.
$2,200,000

5288 Boca Marina Circle S
3 beds | 3 baths | 2,587 sq. ft.
$1,851,000

2600 S Ocean Blvd 20-F
3 beds | 2.5 baths | 2,134 sq. ft.
$1,825,000

4101 N Ocean Blvd D-901
3 beds | 3 baths | 2,319 sq. ft.
$1,710,000