The talk of a housing bubble in the coming year seems to be at a fever pitch as rising mortgage rates continue to slow down in overheated real estate market.

Over the past 2 1/2 years, home prices have appreciated at an unsustainable pace causing many to ask, “Are things just slowing down, or is a crash coming?” To answer this question, there are two things that we wanna understand. The first is the reality of the shift in today’s housing market. And the second, is what experts are saying about home prices in the coming year.

The reality is, we’re seeing a big change in housing supply and demand. In South Florida, listings have increased about 30% compared to last year, while showings are down almost 17%. This is an inflection point for housing because over the past two years, there was such a massive amount of demand for buyers and not enough homes for sale.

Right now we’re predicting home prices to be up only marginally through 2023. The average of 6 expert forecasters is for national home prices to appreciate by about 2.5% in the coming year which is much less than the 17% and 25% we saw in 2020 and 2021. Only 1 in 6 is calling for a home price depreciation because most homeowners refinance their home in the last two years and have rates in the twos or threes, those people are much less likely to sell and trade up to a mortgage with more than double that rate. This will keep inventory low and prevent prices from dropping significantly.

Every market is different, and it’s possible that many second home markets where people don’t have to buy, experience more of a decline than I think we’re in store for here in South Florida.

You can’t time the market. If you’re buying a home to live in for 5+ years no matter what happens in the short term history says the prices will remain stable and appreciate in the long term. Buy land, God’s not making any more of it.

Posted by Andy Mandel on
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