What Experts Project for Home Prices Over the Next 5 Years

If you're planning to buy a home, one thing to consider is what experts project home prices will do in the future and how that might affect your investment. While you may have seen negative news over the past year about home prices, they’re doing far better than expected and are rising across the country. And data shows, experts forecast home prices will keep appreciating.

Experts Project Ongoing Appreciation

Pulsenomics polled over 100 economists, investment strategists, and housing market analysts in the latest quarterly Home Price Expectation Survey (HPES). The results show what the panelists project will happen with home prices over the next five years. Here are those expert forecasts saying home prices will go up every year through 2027 (see graph below):If you’re someone who was worried home prices would fall because of stories you’ve read online, here's the big takeaway. Even though home prices vary by local market, experts project prices will continue to rise across the country for years to come. And these numbers indicate the return to more normal home price appreciation.

And while the projected increase in 2024 isn’t as large as 2023, it’s important to recognize home price appreciation is cumulative. In other words, if these experts are correct, after your home’s value rises by 3.32% this year, it’ll appreciate by another 2.17% next year. This is a good example of why owning a home is a choice that wins big over time.

What Does This Mean for You?

Once you buy a home, price appreciation raises your home’s value, and that grows your household wealth. To see how a typical home's value could change in the next few years using the expert projections from the HPES, check out the graph below:In this example, let’s say you bought a $400,000 home at the beginning of this year. If you factor in the forecast from the HPES, you could potentially accumulate more than $71,000 in household wealth over the next five years.

So, if you're thinking about whether buying a home is a good choice, remember how it can be a powerful way to grow your wealth in the long run. 

Bottom Line

According to the experts, home prices are expected to grow over the next five years at a more normal pace. If you’re ready to become a homeowner, know that buying today can set you up for long-term success as home values (and your own net worth) grow. Let’s connect to start the homebuying process today.

Planning to Retire? Your Equity Can Help You Make a Move

Reaching retirement is a significant milestone in life, bringing with it a lot of change and new opportunities. As the door to this exciting chapter opens, one thing you may be considering is selling your house and finding a home better suited for your evolving needs.

Fortunately, you may be in a better position to make a move than you realize. Here are a few reasons why.

Consider How Long You’ve Been in Your Home

From 1985 to 2009, the average length of time homeowners stayed in their homes was roughly six years. But according to the National Association of Realtors (NAR), that number is higher today. Since 2010, the average home tenure is just over nine years (see graph below):

This means many homeowners have been living in their houses even longer in recent years. When you live in a home for such a significant amount of time, it’s natural for you to experience changes in your life while you’re in that house. As those life changes and milestones happen, your needs may change. And if your current home no longer meets them, you may have better options waiting for you.

Consider the Equity You’ve Gained

And, if you’ve been in your home for more than a few years, you’ve likely built-up substantial equity that can fuel your next move. That’s because you gain equity as you pay down your loan and as home prices appreciate. And, the longer you’ve been in your home, the more you may have gained. Data from the Federal Housing Finance Agency (FHFA) illustrates that point (see graph below): 

While home prices vary by area, the national average shows the typical homeowner who’s been in their house for five years saw it increase in value by nearly 60%. And the average homeowner who’s owned their home for 30 years saw it almost triple in value over that time.

Whether you’re looking to downsize, relocate to a dream destination, or move so you live closer to friends or loved ones, that equity can help. Whatever your home goals are, a trusted real estate agent can work with you to find the best option. They’ll help you sell your current house and guide you as you buy the home that’s right for you and your lifestyle today.

Bottom Line

As you plan for your retirement, let’s connect so we can find out how much equity you’ve built up over the years and plan how you can use it toward the purchase of a home that fits your changing needs.

Home Price Forecasts Revised for 2023 [INFOGRAPHIC]

Some Highlights

• Last year, some housing experts projected a decline in home prices by the end of 2023. But that didn’t happen – inventory was just too low.
• While it’s normal for experts to re-forecast throughout the year, the good news for 2023 is that prices are no longer projected to decrease.
• Let’s connect so you know what’s happening with home values in our local area.

Sources

• https://www.mba.org/docs/default-source/research-and-forecasts/forecasts/mortgage-finance-forecast-dec-2022.pdf
• https://www.mba.org/docs/default-source/research-and-forecasts/forecasts/2023/mortgage-finance-forecast-aug-2023.pdf
• https://www.fanniemae.com/media/45801/display
• https://www.fanniemae.com/media/48726/display
• https://twitter.com/NewsLambert/status/1671900591113609216 (Morgan Stanley)
• https://twitter.com/NewsLambert/status/1671556169712672768 (AEI)
• https://www.zillow.com/research/data/
• https://www.zillow.com/research/housing-market-challenges-32923/
• https://ustoday.news/a-20-drop-in-house-prices-7-forecast-models-tend-to-crash-here-the-other-13-models-show-the-housing-market-in-2023/ (Wells Fargo)
• https://twitter.com/NewsLambert/status/1686959362563092480 (Wells Fargo)
• https://twitter.com/NewsLambert/status/1691799764466008217 (Goldman Sachs)
• https://pulsenomics.com/surveys/#home-price-expectations
• https://www.corelogic.com/intelligence/us-corelogic-sp-case-shiller-index-down-by-0-5-year-over-year-in-may-but-a-turning-point-may-be-ahead/
• https://view.e.fanniemae.com/?qs=dd7a875aaf273bf9cc0d451ff7cd4bec791f29b000f7916b3935d94770ed1f009af1072ee8400b8d3d40310113be33e6106c9aea71d7b22fbb87ad26bbcfe90630f1ef8f04bd2f7b7576e1b494263bf85f1ae4e4ba224216

Expert Home Price Forecasts Revised Up for 2023

Toward the end of last year, there were a number of headlines saying home prices were going to fall substantially in 2023. That led to a lot of fear and questions about whether there was going to be a repeat of the housing crash that happened back in 2008. But the headlines got it wrong.

While there was a slight home price correction after the sky-high price appreciation during the ‘unicorn’ years, nationally, home prices didn’t come crashing down. If anything, prices were a lot more resilient than many people expected.

Let's take a look at some of the expert forecasts from late last year stacked against their most recent forecasts to show that even the experts recognize they were overly pessimistic.

Expert Home Price Forecasts: Then and Now

This visual shows the 2023 home price forecasts from seven organizations. It provides the original 2023 forecasts (released in late 2022) for what would happen to home prices by the end of this year and their most recently revised 2023 forecasts (see chart below):

As the red in the middle column shows, in all instances, their original forecast called for home prices to fall. But, if you look at the right column, you’ll see all experts have updated their projections for the year-end to show they expect prices to either be flat or have positive growth. That’s a significant change from the original negative numbers.

There are a number of reasons why home prices are so resilient to falling. As Odeta Kushi, Deputy Chief Economist at First American, says:

“One thing is for sure, having long-term, fixed-rate debt in the U.S. protects homeowners from payment shock, acts as an inflation hedge - your primary household expense doesn't change when inflation rises - and is a reason why home prices in the U.S. are downside sticky.”

A Look Forward To Get Ahead of the Next Headlines

For home prices, you’re going to continue to see misleading media coverage in the months ahead. That’s because there’s seasonality to home price appreciation and they’re going to misunderstand that. Here’s what you need to know to get ahead of the next round of negative headlines.

As activity in the housing market slows at the end of this year (as it typically does each year), home price growth will slow too. But, this doesn’t mean prices are falling – it’s just that they’re not increasing as quickly as they were when the market was in the peak homebuying season.

Basically, deceleration of appreciation is not the same thing as home prices depreciating.

Bottom Line

The headlines have an impact, even if they’re not true. While the media said home prices would fall significantly in their coverage at the end of last year, that didn’t happen. Let’s connect so you have a trusted resource to help you separate fact from fiction with reliable data.