We have passed the peak of mortgage rates; we won’t see 7% again, but we will hopefully see a drop below 6% in the coming two years. The federal government might raise the interest rates a few more times to counteract the treasury bonds that were sold, but I don't think that mortgage rates will move with the interest rates.
Inventory is unlike during 2008, when people were forced to sell because of job loss. People are still working today, and homeowners opt to keep their low mortgage rates of 3% instead of selling their homes and accepting the higher mortgage rate.
The median income to buy a middle-class home is now up to $85,000 per household. This is why we see a decline in construction contracts; it's just too expensive.
In 2022, it was estimated that 35% of your salary went to paying your mortgage of a $350,000 home at 7%; it is predicted that by 2030 the amount you pay will be the same, but the percentage of your salary after promotional growth equates to 24% towards the home mortgage. In other words, You are expected to make more by 2030 and still pay the same amount in dollars for your mortgage.
Data also states that the median home price is up 10% from last year. Home prices are expected to grow due to inflation. Conclusively in 2023, unit sales will drop by 7% with a home price growth of 1%. And in 2024, unit sales will increase by 10%, and home prices will grow by 5%. By the start of 2025, we should see an increase of 3% in unit sales (homes on the market) and an increase in home prices of 6% from where we are today.
The real estate forecast assumes 2/3 of millennials are expected to buy a home in 2-3 years. This is because the asking price for rent has nearly doubled in the last five years. These rent prices are trailing indicators of inflation, causing a perpetuation of inflation in the future. Rent is increasing at a higher rate than owning a home, which urges first-time home buyers to buy a home still.
Below you can see a 15-page report of the predicted real estate market for 2023 provided by a trusted source known as Brian Buffini, a real estate leader.
For more questions about what to expect or if you or someone you know would like to buy or sell real estate, please reach out at any time.