There is no doubt that the housing market has slowed down considerably across the country. With mortgage rates rising at a rapid pace, we have already seen a dramatic slowdown in home buyer activity. As a result, we are seeing homes remaining for sale on the market for longer periods of time. While home prices have already begun to tick down slightly across most of the country, some of the most expensive metro areas are seeing an even bigger slide in home prices. Furthermore, we are seeing markets that grew the most over the past several years showing even bigger price reductions. A recent poll of economists showed that a shift to a buyer’s market is expected, but the timing differs some.
Economist predictions
According to a recent economist survey on the future of the housing market, most predict a transition to a buyer’s market by the end of 2023. Below are the findings:
- 56% expect a significant shift to a buyer’s market in 2023
- 24% expect a significant shift to a buyer’s market in 2024
- 13% expect a significant shift to a buyer’s market in 2025
- 8% expect a significant shift to a buyer’s market after 2025
What about rental prices?
While the home buying market will inevitably slow down, Americans still need a place to live. With this said, the demand for rental housing is expected to remain strong and even strengthen. For example, many would-be first-time home buyers will likely remain or re-enter the rental market due to persistently high home prices, higher mortgage rates, and inflation. Interestingly, this panel of economists is also predicting rental price growth to outpace overall inflation, the stock market and home values over the next 12 months.
As for annual rental price growth through the end of this year, it is largely expected to be around 8.6%. Moving forward into 2023, this rental price growth is expected to moderate some to 5.4%. It is important to note that these levels of rental price growth still exceed what was seen prior to the pandemic.
Summary
In addition to high home prices and rapidly rising mortgage rates, the American consumer is facing several headwinds with record-high inflation and a likely prolonged recession. With this said, not all housing markets are created equal. Although no housing market will be immune from the considerable slowdown, we still expect to see high demand for the South Florida market. Given the bullish predictions for rental price growth, this may be a good time to consider adding an income-producing property to your investment portfolio. Do you need assistance? We can help! Contact Natasha at Live South Florida Realty, Inc. today. Also, be sure to download the free Florida Home Search app for your mobile device to have the power of the MLS anywhere you go.
