According to Danielle Hale, Realtor.com’s chief economist, the more bullish outlook predicted for this year’s real estate market has been revised to slip this year, but less than 1%. She expects home prices to rebound more convincingly in 2024.
Although the pace of growth will be nothing like sellers or buyers witnessed during the past couple of years, it will be the real estate market’s normal pace.
When Zillow polled 117 economists and housing experts, their consensus was that home prices would increase at an annual rate of 3.5% until 2027.
“A return to more normal growth would be welcome after the rollercoaster ride that home prices have been on lately,” Jeff Tucker, Zillow’s senior economist said in the survey release.
The annual return on single-family homes reached nearly 13% between 2021-2022. In California, the appreciation was even higher. That’s a sharp contrast to so-called “normal growth”, which averaged an annual increase of 4.8% between 1987-2000.
Although housing prices may be declining in certain areas of California versus last year, they have been up month over month for the last three months. Much of that increase is because of an imbalance in supply and demand. The number of previously owned homes on the market was at a record low in May, which helps to keep prices elevated.
Buyers are turning to new homes but with an eye to affordable ones. Buyers may find better deals later this year when price increases seen in spring and summer tend to slow down as the most popular time for homebuying winds down.
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