Are We Heading For A Real Estate Market Crash In 2023?
The US housing market has declined substantially from its 2022 peak. As mortgage rates have almost doubled in the past year, the real estate market cooled as buyers could not afford as much home with the money they had allotted. This led to a decline in real estate prices in 2022 and 2023.
What will happen to the real estate market for the rest of 2023? Will we see a real estate market crash? Read more about this topic below, then talk to our Hinsdale real estate attorney at Dan Walker Law Office if you have questions about a real estate transaction.
Goldman Sachs Warned Clients About 4 US Markets in 2023
When asking about a real estate market crash in 2023, it is essential to remember that the US has many different housing markets. While some markets are declining, others may still be rising.
Early in 2023, Goldman Sachs told clients that four cities in the US might see a significant downturn shortly. These markets were:
- San Jose, California
- Austin, Texas
- Phoenix, Arizona
- San Diego, California
Each market is expected to lose about 25% of its value this or next year. In addition, other US markets may see a moderate downturn.
Many Real Estate Experts Expect The Downturn To Be Moderate
There is plenty of good news about the US housing market, however. Real estate experts think some cities could see moderate increases soon, such as Miami and Baltimore. Many housing experts also say that the 2023 downturn will be moderate and not comparable to the 2008 crash.
Also, there is a lot of demand from Millennials and Gen Z. They want more housing, even with higher interest rates. The National Association of Realtors reports that first-time home buyers were behind 30% of real estate sales in June 2022. This was up from 27% the month before. Most people buying for the first time in the US are under 40. This indicates a broad pool of buyers and plenty of demand this year.
Zillow Still Optimistic About US Housing Market
Zillow does not believe the housing market will crash in 2023. Instead, it forecasts a 1% fall in home prices this year. It also expects ¾ of the 897 markets it measures to have a drop in home prices in 2023. However, about 240 markets may see an increase in home prices, including Atlantic City, New Jersey; Yuma, Arizona, and Homosassa Springs, Florida.
Mortgage Rates Generally Falling
Another factor that may prevent a market crash is mortgage rates are generally declining from last year’s highs. While rates are almost double from a year earlier, they are edging closer to 6% as inflation begins to decline. If mortgage rates continue to fall, as many mortgage experts believe, this also will prevent a real estate market crash. The New York Times also reported last week that mortgage rates of around 6% had started to bring some buyers back into the market. As rates continue to fall, this should increase demand, and that will prevent prices from substantially declining.
Speak To Our Hinsdale Real Estate Attorney Today
Real estate transactions still need to be conducted, whether the market is rising or falling. If you are considering buying property in West Loop, Lincoln Park, Lake View, or another Chicago neighborhood, our attorneys can help. Contact our Hinsdale real estate attorney at Dan Walker Law Office today at (630) 920-8000.