Expert Home Price Forecasts Revised Up for 2023

Expert Home Price Forecasts Revised Up for 2023

As we approach the end of the year, it's worth reflecting on the numerous headlines that emerged in late 2022, predicting a substantial decline in home prices for 2023. These forecasts sparked widespread fear and raised concerns of a potential housing market crash akin to the 2008 crisis. However, it turns out that these headlines missed the mark.

While there was indeed a modest correction in home prices following the extraordinary price surges during what some dubbed the 'unicorn' years, the national housing market did not experience the dramatic crash that many had feared. In fact, home prices have proven to be much more resilient than initially anticipated.

Let's examine some expert predictions from late last year and compare them to their most recent forecasts. This will illustrate that even the experts themselves acknowledge that their earlier pessimistic outlook was off the mark.

Expert Home Price Forecasts: Then and Now

This visual shows the 2023 home price forecasts from seven organizations. It provides the original 2023 forecasts (released in late 2022) for what would happen to home prices by the end of this year and their most recently revised 2023 forecasts (see chart below):

As indicated by the red values in the middle column, all of these organizations initially predicted a decline in home prices. However, a glance at the right column reveals that all the experts have since adjusted their year-end projections to either indicate stable prices or anticipate positive growth. This represents a noteworthy shift away from their original forecasts of negative price changes.

Several factors contribute to the remarkable resilience of home prices. As Odeta Kushi, Deputy Chief Economist at First American, points out:

"One thing is certain: long-term, fixed-rate debt in the U.S. serves as a safeguard for homeowners against payment shocks. It also acts as an effective hedge against inflation, ensuring that your primary household expense remains consistent even when inflation rates rise. This is one of the key reasons why home prices in the U.S. tend to remain relatively stable."

A Look Forward To Get Ahead of the Next Headlines

Prepare for potential misleading media coverage in the coming months regarding home prices, largely due to the seasonal nature of home price appreciation. To stay informed and avoid misinterpretations, here's what you should be aware of to stay ahead of any upcoming negative headlines.

Towards the end of this year, as is customary, housing market activity tends to slow down. Consequently, home price growth will also decelerate. However, it's crucial to understand that this deceleration doesn't equate to a decrease in home prices. Rather, it signifies that prices are not rising as rapidly as they did during the peak homebuying season.

In essence, a slowdown in price appreciation should not be confused with home prices actually depreciating.

Bottom Line

Headlines, even when inaccurate, can influence perceptions and decisions. Despite media predictions of a substantial decline in home prices in their late-year coverage, such a scenario did not materialize. Let's establish a connection so that you have a dependable source for distinguishing between reality and misinformation, relying on trustworthy data.