“A good long-term track record, and... grim, forecasting the Q3 and Q4 economy dropping to levels similar to 2008 and March 2020,” he said.
On April 20, Zillow released a revised year-over-year value and sales forecast that showed a lowered expectation in home sales for 2023.
“Driving the downwardly revised forecast are affordability headwinds that have strengthened faster than expected, largely due to sharp increases in mortgage rates,” the forecast said. “Further risks to the outlook as well: Inventory levels remain near record lows, but have the potential to recover faster than anticipated, which could lower future price and sales volume projections.”
Zillow’s forecast projects home values increasing by 14.9% through March 2023, down 1.6% from the forecast initially made in February. As inflation continues to affect the budgets of potential home owners and housing prices continue to rise at an incredible rate, Zillow said that the coming year will be a competitive one for the market.
“Even with the downward revision from last month, these figures would represent a remarkably competitive housing market in the coming year,” the report said. “Annual home value growth of 14.9% would have been the highest ever recorded by Zillow before June 2021, and 6.09 million existing home sales would mark the second-best calendar year total since 2006. What’s more, the labor market continues to be a bright spot for housing demand, with a very low national unemployment rate and higher nominal wages, though inflation is putting pressure on household budgets.”
The median sales price for Georgia homes rocketed 22% year-over-year, up to $355,000, in May, according to data from the Georgia Association of Realtors. Atlanta’s Buckhead, one of the city’s wealthiest districts, reported a median home value of $669,668 in its June 22 report.
Chief economist Daryl Fairweather offered her thoughts on the market as Redfin reported the largest year-over-year decline in their homebuyer demand index in over two years. As consumer interests continue to fall, Fairweather said that home prices may fall with them next year.
“Mortgage rates near 6% have put a big chill on demand for homes,” Fairweather said in the report. “With home prices still at record highs, the affordability crisis has been dialed up to an 11 out of 10. Home sellers are aware of this as well; a record share are dropping their asking price. Even though there are fewer home sales, prices have not declined any significant amount yet. But if the housing market continues to cool, prices could fall in 2023.”
A worsening 2022 economy proved to be a common thread among experts. Exasperated by inflation, rising mortgage rates and sinking consumer interest have caused many experts to also anticipate this year’s record-high home prices to possibly see a dip in 2023. While inflation and the overall recession, combined with the country’s currently low unemployment rate, will dictate many market trends in the coming year, it is perhaps safe to expect a still incredibly competitive housing market in 2023.
John Ryan, chief marketing officer at Georgia Multiple Listing Service, told the Atlanta Business Chronicle that the local housing market’s record-high annual appreciation has already cultivated an incredibly competitive market.
“Because demand is so high, first-time buyers are competing against other buyers in a very competitive offer process, which often includes escalators,” Ryan said. “This process ultimately drives up the sales prices, eliminating the ability of first-time buyers to compete.”
Georgia’s expectant first-time home buyers should not hold their breaths. They are likely in for a difficult 18 months, though the market’s trends are always changing.