US Housing Market: What You Need to Know

US Housing Market

Are you thinking about selling or purchasing a house right now? Since not everyone wants to take out loans or use services such as the Triceloans app for quick loans, there are thousands of people in the U.S. today considering this option because of rising inflation and problems in their financial lives. But there are some new trends in the housing market, so you should take them into account. 

Ready for the latest news and updates on the American housing market? Keep on reading to find out expert predictions and housing market forecasts for the next year to help you make the right decision.

Will Your Home Lose Value in 2023?

Homeowners benefited for the past couple of years as the median home value has increased 43% since 2019. The sellers had a larger profit during this time. Is the situation the same now? 

A lot has changed in the housing market since the beginning of 2023. Home sales have lowered by 6% compared to the previous year, while home prices have begun to drop. Many economists and financial experts believe that prices won’t rise dramatically but modestly next year. How will it affect present homeowners? Home value is connected to pricing policy.

The outcome may be different. Some homeowners might find these changes frustrating. Others who have enough savings will remain financially afloat. If home prices drop, sellers will notice less profit.

On the other hand, annual home prices keep on increasing. The national average home price boosted by 14.3% to $435,000 in 2022 compared to 2019. Nowadays, we can still notice a shortage of homes for sale and high buyer demand. Hence, prices won’t remain in one place. They will alter each month but still be higher compared to the previous year.

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How Higher Home Prices Affect Buyers

Are you dreaming of becoming a homeowner? Then you need to know much about the housing market to understand which house you can afford. We recommend you stay within your personal budget, as taking a larger mortgage can lead you to a vicious debt cycle if you can’t afford to make regular loan payments. 

It’s easy to find yourself deep in debt, but getting out of it can be much more challenging. Follow these pieces of advice to be confident about purchasing a home next year:

  • Save for a down payment. One of the first and most important tips is to save as much as you can for a down payment. It would be perfect if you managed to set aside 20% or more. It will help you avoid private mortgage insurance or PMI. If you are a first-time homebuyer, it may be enough to save up to 10% as well. However, the larger your down payment, the less debt you will take on. Less debt means more focus and patience.
  • Limit the house payment. You need to limit the house payment to up to 25% of the monthly income. This payment comprises home insurance, principal, property tax, homeowners’ association fees, and interest. Keep in mind that private mortgage insurance will be added to this list, provided that your down payment is less than 20%. It is another benefit of saving enough for your down payment.
  • Select a 15-year conventional mortgage. This type of mortgage should have a fixed rate for your convenience. Various experts advise homebuyers to accept a conventional mortgage for 15 years as this is the most suitable lending option with the lowest rates. In comparison, USDA, VA, FHA, and a 30-year mortgage will come with adjustable rates and make you pay additional thousands of dollars in fees and interest.

A Housing Market Crash: Will It Happen?

All specialists predict that there won’t be a housing market crash in the nearest future. We were witnesses to how this market tanked back in 2008. Better lending tools have been offered to consumers since then. It would need to have a negative consumer credit profile from a borrower to conduct a housing market crash.

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Thus, we won’t see a crash in this market in the coming year. The applicants and borrowers who are about to take out mortgages have strong credit and are well-qualified. On the other hand, the recession may still happen. We can notice higher unemployment rates and more and more predictions about the economic recession as the Federal Reserve strives to fight against inflation.

According to Fannie Mae National Housing Survey, 60% of respondents say home rental prices will go up in the next 12 months. As Americans expect further growth of these prices, housing affordability will keep on reducing, which will discourage potential sellers from putting their homes up for sale.

What are the warning signs of a market crash? Here are some red flags to look for:

  • Lower economic growth
  • Higher mortgage rates
  • Overpriced houses that outpace inflation and affordability
  • Increasing loan-to-income levels
  • Rising mortgage balances

Risky Purchasing Options Become More Accessible

Some sellers offer a rent-to-own contract to borrowers who are willing to purchase a home they can’t afford yet. What does this agreement mean? You basically agree to rent the home for several months or several years until you become its owner. Consumers without a down payment may find this option accessible and useful as they have a chance to move into this home quickly without the need to set aside funds.

You even aren’t required to qualify for a mortgage straight away. The drawback of this option is that you will have to pay more for rent, as a portion of this payment will be used for your future homeownership. Experts don’t advise consumers to opt for this solution as rent prices keep on going up across the USA.

The Bottom Line

Nobody can predict whether all housing market forecasts will come true. You need to take into account what financial experts say and make your own choice. A housing market prediction may be beneficial as it gives you an idea of what you can expect if you sell or purchase a house in the coming months. Keep in mind your own finances and situation to make the right housing decision.


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