Last year we wrote a few articles on the US housing market about how high interest rates were starting to slow down the market while inventory also remained constrained. Now that we have entered a new year how are things shaping up now ? the answer really depends on who you ask.
A lot of people in the housing industry will predict lower Buyer demand amid fears of higher borrowing rates, plus Buyers are still facing a shortage of inventory so the feeling is lets put 2023 on the back burner and see what happens.
Others think the housing market will continue to outperform and grow as compared to the pre-pandemic. Nick Bailey, president and CEO of RE/MAX, LLC recently quoted “ One thing I can say for certain about the housing market in 2023 is that no matter the macro-economic conditions, Americans will continue to buy and sell millions of homes”
Last year the US housing market started to face a downturn and so far this year things do not look set to change, the volume of transactions are lower than this time last year and we are staring to early signs of declining prices across age country.
But predictions are a bit of an unknown and nobody can see 12 months in advance but what happens this year will depend on what happens in the broader economy. Will inflation continue to rise or will it fall ? are we going to see a recession or with the Federal Bank step in and soften the landing.
Many experts are in agreement that likelihood is mortgage rates will start to fall this year and in this event we could actually start seeing price increases again, some are saying we can expect a 4% fall in prices at the start of the year but come the end of Spring we could be looking at price increases of over 5% or more.
One thing bear in mind is that these general predictions are nationwide and not are not specific to a certain State or City, each State and City has its own unique combination of factors that is driving house prices and demand.
Taking Cleveland as an example we seen the housing market decline in November last year due to rising mortgage rates both sales and new listings were down as compared to last year. But actual house prices are still rising by single digits. According to Realtor.com, Cleveland-Elyria, Ohio has been ranked 32nd among the 100 largest U.S. metros in their 2023 housing forecast. In 2023, Cleveland home prices are projected to increase by 4.3%, while home sales are projected to increase by 2.7%. In Cleveland–Elyria house prices rose 10.8% over the past year and rose 0.4% over the last quarter. The Cumulative change in the Cleveland house price index since 2007 has been +57.7%.
Cleveland has a record of being one of the best long-term real estate investments in the U.S. The cumulative appreciation rate over the ten years has been 67.95%, which ranks in the top 50% nationwide. This equates to an annual average Cleveland house appreciation rate of 5.32%.
There is general consensus that we have now entered a Buyers market but not in Cleveland, in Cleveland we are still seeing a Sellers market as there still is a limited supply of houses for sale and Buyers are still offered to compete with each other which is resulting in higher prices and quicker sales. When you have a high demand and limited supply this benefits the Seller when it comes to setting their price. The only way the the scales will tip in Cleveland is if we see an increase in inventory to more than six months inventory which is not very likely to happen in 2023 or maybe even in 2024. Even if mortgage rates do not stop increasing the likelihood is that Cleveland house prices will not decline given the volume of demand and low level of supply.
If you would like to see some of our Cleveland inventory please email invest@globalinvestmentsincorporated.com
