2023 is here, and by the time you read this, we’ll almost be 31 days into the new year.
In my last article, I mentioned how crazy the real estate market has been and the challenges buyers encountered. With the increase in interest rates and the compounding of supply issues, builders slowed building new homes. With the continued lack of inventory in new homes and resale, prices remained high. Increasing interest rates have slowed home sales, and buyers are wondering what is next.
Many experts are providing predictions of where they believe the housing market will be yearly and within the next five years, and YES, real estate is still a great investment.
Over the last 50 years, home prices have increased by 4.23%, adjusted for inflation. Now that doesn’t sound like much if you remember hearing or experiencing price increases over the past couple of years of 19 and 20%. However, if you rented, you know that when you move, you have no increase in value to draw from, and you likely experienced increases in rent rates during that time.
Here is what most experts predict. 2023 home values will either be flat or increase by 1.3%, and 2024 could end the year with an additional 3% increase in value. If those numbers are close, 2025 will see an increase in available housing inventory, increased demand, increasing prices, and sellers willing to sell, which should provide buyers with more leverage than in a tight low inventory market.
When these same experts provide their outlook for 2026, most expect home prices to increase over 4 years by as little as 10.3% and as much as 46.5%. No matter where the numbers fall, if they are between 10% and 45%, most people would love to see their investments gain even 10%, much less than 45%.
Please keep in mind these numbers are national. Florida is different.
All the above numbers can be in flux up, down, or flat depending on where you live or would like to live. According to Forbes2, When will the housing market in Florida crash ?, the writer of the article believes “a horrific crash comparable to the late-2000s housing crash seems unlikely.” Values increasing 19 and 20% over the past couple of years. It would need to make huge adjustments to wipe away all the increases in the past couple of years. I recently spoke with a client that told me they were waiting for the market to crash. I let them know that was unlikely. The market is much different than in the late 2000s. Banks aren’t lending the same way they did and are not about to make the same mistake.
Homeownership is interesting. Many believe in and want to be part of the American Dream. Renters state they don’t want to be tied down to a mortgage. Renters usually want someone else to pay all homeowners' added expenses. However, you are paying those added expenses, even if it is a little less, spread out by all the renters in the complex. Today, many renters are paying as much in rent as some homeowners are in monthly mortgage payments.
At the end of the day, you have to ask whether I rent or purchase. Using the simple 4.3% for 50 years example above, purchasing a home at $100,000, the value would grow to $820,7583 50 years later.
I’ve rented in my life. Rest assured, I’m a happy homeowner!
I’m here to assist you with information to help you make the selling/buying decision.
Eric Mock, Realtor, You Have Realty.
Contact me at: email@example.com or 407-625-1770.
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