Where are Ocean County home prices headed and what affect will that have on sellers and buyers?
With mortgage rates escalating along with home prices; increased indecision is being felt throughout the market. Many prospective sellers and prospective buyers are feeling nervous.
While 2022 may be remembered as a year of housing volatility, 2023 likely will become a year of long-lost normalcy returning to the market; mortgage rates are expected to stabilize while home sales and prices moderate after recent highs.
That moderation may have already started in Ocean County. Over the last quarter of 2022 (in comparison to 2021), single family home sales decreased by over 34%. That didn’t stop sold prices from rising though, they’re up over 9% while inventories increased by over 7%.
Forecasts from experts:
Realtor.com® Chief Economist Danielle Hale was upbeat about the prospects of property appreciation, projecting a 5.4% increase in existing-home prices for 2023.
Vice president of forecasting and analysis at the National Association of Home Builders, said she expects housing starts to drop by double digits in 2023. Then, “as the economy improves in 2024, the housing market will gradually come out of this slump that is expected this year.
“We believe 2023 will bring lots of variability in how housing markets adjust,” Bright MLS Chief Economist Lisa Sturtevant said. “There will be a lot of resetting expectations for both buyers and sellers.”
Annual home price growth is expected to slow to 0% by the spring of 2023, according to CoreLogic data. “We believe this will vary greatly across the country, and the rate of growth and decline will depend on the region. Housing markets will continue to struggle with the loss of consumer confidence.”
As existing homeowners are locked in with historically low interest rates, they will be reluctant to trade out to today’s higher mortgage rates and potentially downsize their home. Limited resale inventory means new construction is needed to meet the growing demand for housing—and when combined with the undersupply of existing homes, will drive a quick rebound of the housing market in the second half of 2023.
What’s the ‘Big Picture?’
Taking a big-picture look at the possible real estate market next year, most pros are in consensus: something of a transitional year, characterized by uncertainty.
The housing market could be tepid in 2023, with only lukewarm demand and a limited amount of inventory available for sale.
The hope is that, as supply and demand within the housing market normalizes, interest rates can start to come back down to earth. Until that happens, those who simply cannot afford the costs of borrowed money will have to continue to wait.
Even though mortgage rates and home prices are expected to moderate, home sales may still sag under persistent inventory shortages, housing economists predict.
Karl Hess provides expert real estate services to residential buyers and sellers in Ocean County. Contact us today for more information on Ocean County Real Estate and for professional assistance navigating this complex home market.