The Next Five Years of the Housing Market—What Can Buyers Expect?
Over the past several years, the housing market has gone through a number of unexpected highs and lows, proving its fickle nature in an economy influenced by labor and industry, government and policy, war and conflict, and, as we know all too well, a global pandemic. Predicting the years ahead seems futile, but a few current market trends could help economists determine a basic timeline for the 5-year period following 2022.
While the coming year will be a time of market softening and falling home prices, research house Capital Economics predicts a gradual rebound of home prices in 2024 and 2025, Forbes reports. Over the next five years, economists like the National Association of Realtors’ Lawrence Yun and Bankrate chief financial analyst Greg McBride expect an average annual return of mid to low single digits, leading to total price growth between 15% - 25% in a strong post-pandemic recovery.
It’s important to keep in mind that the falls that are expected over the next 1 to 2 years are coming off a high base. Goldman Sachs projections show the bottom of the housing market in March 2024, with the market coming back down to the level last seen around December 2021.
So we’re likely to see the hot housing market slow down a bit, but mortgages are going to get more expensive at the same time. That leaves potential home buyers stuck. Those who’d been dutifully saving for their down payment might now find that the property that they had in mind is out of reach, as the mortgage has just added $500+ to their bottom line.