The housing market has been on a tear in recent years, with home prices soaring and sales setting record highs. But there are signs that the market is starting to cool off, and experts are predicting a more balanced outlook in the coming years. There are, of course, some unknowns as well. Predicting what things will look like 5 years from now is no easy feat – after all, no one could have ever predicted the Covid-19 pandemic itself and the huge impact it would have on the housing market.
Here are some key housing market predictions for the next five years.
Home Prices Will Continue To Rise… But More Slowly
As we’ve experienced in the last few years, home prices will continue to rise – however, the anticipated pace of this growth is much slower than it has been. Throughout the Covid-19 pandemic, home prices were soaring in the US, with the median home price increasing more than 25% from 2020 to 2022.
For sellers, the good news is that home prices are expected to continue to rise over the next 5 years – but at a much slower rate. And there isn’t a decrease in sight!
Buyers will be happy to know that the growth rate is anticipated to be about 3-5% year over year. This is still more than the average 2% growth rate but much more manageable for home buyers than the huge jumps we’ve seen in the last couple of years.
Mortgage Rates Will Drop… Eventually
The Universal Law of Gravitation states that “what goes up must come down,” which holds true for mortgage rates. Mortgage rates are currently high, oscillating between 6-7%. It’s currently anticipated that by 2025 rates will be a full 2% lower than they are now. This is great news for anyone who can hold off their home purchase for a couple of years since that 2% can greatly impact a monthly mortgage payment.
Inventory Is Going To Remain Low
While mortgage rates will start to decrease, that doesn’t necessarily mean home buying will be any simpler. The inventory shortage that caused astronomical sales prices in the first place is expected to continue, and while the supply of homes on the market will increase a bit, it will still be tight.
It’s essential to consider these factors when deciding to buy or sell a home in the next five years. The housing market is unpredictable, but by understanding the factors that could impact it, you can make informed decisions that are best for you. For example, the lack of inventory means that while the market will become a bit more balanced over the next few years, it may still be difficult to find the right home for you and your family simply.
If you’re ready to start your home search now or want to keep an eye on the market’s status so you know when the optimal time to buy or sell is, the team at Wilson Associates is ready to help! Get in touch with us today.
