Do Experts Think The Housing Market Will Crash In 2023?

For those thinking about buying a home or listing their home for sale, paying close attention to the real estate market and housing trends is critical. That's not always simple to do, thanks to the wide range of news stories that point to worrisome details and contradictory information. Forbes reports that, in the first nine months of 2022, the number of home sales fell by 28.4% compared to the prior year. Median home prices in November were $379,100 compared to $413,800 in June. More so, mortgage interest rates continue to climb, having reached nearly 7% in 2022 compared to under 3% at the end of 2021.

So, what's to come? From home buyers hoping to see property prices fall so they can cash in on lower costs, to home sellers who may want to move quickly if such an occurrence is likely to occur in 2023, all eyes are on what happens in the coming months. There's no way to know what the future holds, but some experts have strong opinions on whether a housing market crash could occur.

Is the current market a housing bubble?

Experts continue to watch market conditions to determine if the current market is a bubble — a period in which home prices grow too quickly — which could mean they would fall fast. U.S. News & World Report found that, while the rapid increase in home values and demand after the pandemic is significant, fears of it actually being a housing bubble are less likely now that month-over-month home prices are falling at a slowed pace and remain up 5% on the year.

With home values remaining high, some experts believe a crash, or sudden drop in value, is not likely. Rather, a more steady pace of gradual value adjustments is a potential. Experts at Forbes suggest that it's not wise for home buyers to make decisions about when to buy based on economic factors alone. Moreover, home prices may correct somewhat, but they will be at a slower rate. It is prudent to buy a home based on individual needs and goals rather than waiting for a crash.

Will home prices fall significantly?

Home prices are likely to continue to fall into 2023, but other factors will play a role in how that happens. For example, U.S. News & World Report indicates that October of 2022 saw home sales drop by 30%, indicating that people are waiting out the uncertainty in the current economy. That's a good thing for home prices because it may slow any decline in home values simply because there are fewer transactions taking place.

Still, there's ample speculation on what could occur, with various experts offering differing opinions. MarketWatch reports that research firm Capital Economics believes home prices will fall about 8% in 2023, and while that may seem like a good thing for home buyers, it's misleading. The same survey reports that, due to inflation and recessionary factors, homes will be less affordable to many consumers, even with lower prices. When making a home-buying decision then, borrowers should consider their own specific goals, additionally Regional differences in home prices should also be considered.