Photo by PJ Frederick on Unsplash
The housing market has been HOT HOT HOT for the last several years, with mortgage rates at historic lows. During the pandemic in 2020 and 2021, rates fell to record lows, and emergency actions by the Federal Reserve helped to keep them low.
2022 brought an abrupt sea change. With the dark specter of inflation casting clouds of gloom on the economy, a series of Fed hikes pushed mortgage rates to their highest peaks since 2002. However, rates are slowing cooling off, and as the Fed slows down on further hikes, rates should begin to decline somewhat, or at least level off and stop climbing.
Some say it’s not that simple. Let’s consider supply and demand. According to Forbes, demand outweighs supply. Nationwide, the supply is limited by the fact that those who purchased homes at extremely low mortgage rates are digging their heels in deep and not budging. This lack of supply has held prices (mostly) steady, keeping home prices out of reach, especially for first-time buyers.
So, where will the national housing market go in 2023? While some doomsayers are bringing up the “C word” (crash), most analysts say that is not likely. Instead, they see a cooling off period in 2023. National home prices may be due for a 5% drop nationally, while some markets will continue to experience price increases. Let’s see where Asheville stands in this scenario.
Against the grain
Photo by Clayton Manche on Unsplash
One notable trend for the greater Asheville area is that homes are remaining on the market a bit longer than last year and not seeing such high spikes above asking price as before.
Asheville Today reports that strong demand for housing remains, along with limited supply of available homes.
Zillow’s Home Value Index shows the typical home value in the Asheville metropolitan area at $392,744, up 23% in the last year, and up 110% in the last decade. The City of Asheville’s typical home value is $421,664, up just over 20% this past year. While this trend is showing some signs of slowdown, Asheville metro homes still are predicted to rise by 13.7% by April 2023.
Asheville’s appreciation rates remain among the highest in the nation, placing the city in the top 20% nationally. The last 12 months have shown an appreciation rate of 21.69%, placing the area higher than 78.55% of the nation’s cities and towns. So, despite a predicted “cooling off” of rising home rates, Asheville is cruising in far ahead of the national trends.
More optimistic
Photo by Steve Lieman on Unsplash
The National Association of Realtors is a bit more optimistic, saying home prices are not likely to fall in 2023. Low inventory in many areas will keep the pressure on prices steady, so despite a drop in sales fueled by higher mortgage rates, home value should continue to remain strong.
NAR is optimistic about 2024, as well, predicting a 10% jump in home sales and a 5% increase in national median home prices.
Whichever way 2023 plays out, the one constant seems to be that Asheville will stay ahead of most of the nation where home prices are concerned. If mortgage rates cool a bit, competition for scarce existing inventory may once again fuel more generous price increases. However, with inflation affecting the cost of materials in new home construction, 2023 may be the year of “holding the line,” where appreciation occurs at a more modest level than in previous years.
With housing market experts divided on how 2023 can go, we’ll just say it’s anybody’s guess! But it’s fun to put on our prognosticator hat and toss our own “two cents” onto the table.
Wishing all of you a great year ahead!
Happy New Year from your friends at Peter Young Home Inspections. We wish all of you a happy, healthy and prosperous 2023.
Buying or selling a home in the greater Asheville area?
Avoid unpleasant surprises! Contact Asheville Home Inspector Peter Young before signing any contracts. Call (828) 808-4980, or click here to make an appointment.
