Over the last few years, home price increases have left too many potential buyers out of this real estate market. During all these prices, many are hoping for a housing crash to buy a home for themself. Here we find the reason behind the inflation increase during the past few years, and the reason behind the slowing is unlikely in the upcoming years.
Sudden rise in the home pricing
Before the Covide-19 pandemic, the prices of the home was increasing at a constant speed, but after the worldwide pandemic, the costs increased rapidly for many reasons. During the pandemic, the new remote work culture was introduced to the industry, and everyone shifted to their home, and there is no need for a short distance from your office.
At that time, many people left big cities and metropolitan areas and shifted to either rural or suburban areas to cut their living costs. The investors are taking advantage of this situation to buy the properties and rent them to third parties. This trend was prevalent to earn a passive income; many people tried to buy and put on renting their properties for extra income.
The real reason behind the rapid increase in the prices
Image Source: NewsNation
As the prices increased of the properties, Rents also increased with them. Because due to the very high costs of real estate, many lower-income people found it very difficult to afford a home. While some people can buy a house, they still prefer to live in a rented house; they always wait for the home price to drop or crash in the real estate market. The much lower middle class eagerly hopes for a real estate crash like in 2008.
The real cause behind housing inflation is that it takes much time to slow down.
When the demand rises in the home mortgage market, it is caused by Fed’s interest rate hikes to crash the reals estate almost overnight, but to make the market slows down, takes time. The buyer’s and sellers’ expectations are another reason for the housing market. At the time of prices, sellers also hesitate to sell their homes; they are hoping for more money for the same property, while at the same time, buyers want homes at lower prices. The result of this clash led to taking more time to down the market.
2023 Trends for the housing market
Image Source: Times Property
In early 2022 The Federal Reserve put breaks on the housing properties when they started raising the federal funds rate. After this step, the mortgage rates increased more costly. If we talk about the average rate of the 30-year fixed mortgage, it was 3.5% before peaking, while it reached 7% in November. At present, the rate is around 5%. According to different market experts, the rates of mortgages will fall between 6 to 7% in the year 2023 and might fall below 6% after the mid of the year.
Read Also – December Social Security Payment: When Will It Arrive?
