Housing Market Prediction Calls for Tempered Slowdown

December marks the start of the real estate prediction season—and last week, Forbes published an early entry. Forbes is the century-old business magazine that tracks investment and financial markets—often bringing heightened scrutiny to the housing industry since housing is a tail often said to wag the dog (the canine is the rest of the U.S. economy). For anyone who doubts the validity of that metaphor, here’s how the NAR^® maps the economic impact every single home sale makes, state by state.

South Palm Beach Housing Market and Early National Predictions

For those with an eye on the direction of the national and South Palm Beach housing markets, the Forbes outlook was interesting. It was mildly out of step with the grim-faced recession commentaries being offered by most of the talking heads on TV. Residential real estate mayhem is not in the cards for 2023, according to Forbes’ reasoning:

• Early December’s 30-year mortgage rate may be high—averaging around 6.5%—but is far below the 18% rates of the 1980s.
• Admittedly, since rates are more than double January 2021’s rate—there’s bound to be a volume effect on housing market totals (including South Palm Beach’s).
• When interest rates climb, home prices usually fall to compensate—yet that has not been the case in 2022.
• The reason: supply has not kept pace with demand which refuses to vaporize.

Those factors lead Forbes to make some predictions that are less pessimistic than would otherwise be expected. Except for multi-family units, new home construction is on the decline— continuing to exert upward price pressure. The result may be a plunge in the number of single-family home sales but much less of a decline in prices than many expect. High property equities “and a resilient job market” should prevent panic-inducing foreclosure rates, making an all-out stampede from housing unlikely. Redfin expects the total decline in home sales prices to amount to no more than 4% over the coming year— not even a whisper of a reversal of the 40% U.S. price rises since early 2020.

Reach Out Your Trusted Mortgage Expert Today!

South Palm Beach’s housing market may be affected by national trends but seldom matches them precisely. For a more focused look at current local activity, there’s no substitute for the well-researched report I’d be happy to put together for you—with never an obligation, of course! Give us a call today at (561) 316-6800 for more information.