As an affordability crisis widens at the close of 2022, housing experts say homebuyers will likely take a more cost-conscious approach to home purchases in the year ahead. While the Sun Belt has been a magnet for migrating homebuyers throughout the past several years, Midwestern markets are quickly heating up with lower housing costs and a greater stockpile of inventory.
As home prices continue to reach new highs across the country, those seeking homeownership are increasingly buying with friends and family, but according to Zillow, housing affordability will stabilize in 2023 as inflation cools, mortgage rates fall, and list prices plateau.
Zillow expects national home values to remain relatively flat next year, and even fall in the most affordability-challenged markets. Mortgage rates, highly impactful to the mortgage payment, are seeing some recent and encouraging progress downwards as inflation and labor market tightness show small signs of easing, enough to lead some to suggest the Federal Reserve may ease its aggressive monetary contraction. If we’ve actually turned the corner on inflation, that should continue. Volatility in mortgage rates could continue through early 2023, however, an ongoing challenge for those who saw their ability to qualify for the same mortgage change on a monthly or even weekly basis this summer.
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