Predictions for the Real Estate Market Over the Next 5 Years

October 14, 2023
By Houstir

Real estate experts have offered insights into the future of the housing market over the next five years. Forbes and Bankrate, in particular, have shared their predictions.

Forbes Forecast:

Forbes acknowledges a current slowdown with falling prices expected over the next 12 to 18 months. However, they anticipate overall returns in the range of 15% to 25% over the next five years. It’s important to note that Forbes warns of potential “volatility” in the near future, emphasizing that predicting the future of real estate investments isn’t a straightforward task.

Real Estate Year 1:

The first year is expected to see a slow market due to high inflation and rising interest rates, leading to increased monthly mortgage payments. The Federal Reserve’s series of interest rate hikes and a significant jump in mortgage rates have contributed to this scenario. As a result, Goldman Sachs projects a decline in property prices by 5% to 10% in the U.S.

Real Estate Year 3:

Forbes suggests that the housing market is likely to “bottom out” in late 2023 and stabilize by mid-2024, based on research by Goldman Sachs. The expected high interest rates could lead to layoffs in the tech industry, indirectly affecting home prices. Lower prices may motivate sellers to use their equity for larger down payments, while investors could take advantage of falling prices.

Real Estate Year 5:

While it’s challenging to predict the market five years ahead, experts, such as Lawrence Yun from the National Association of Realtors, anticipate total price growth of 15% to 35% nationwide over this period. This projection includes a drop in the first year, followed by a leveling out in 2024 and gradual increases in the following years.

In conclusion, Forbes advises potential home buyers to consider saving for a higher down payment in the near future or downsizing to a more affordable property. This strategy would allow them to leverage their equity for larger down payments when larger homes become more attainable.

Bankrate Forecast:

Bankrate’s five-year real estate forecast highlights recent mortgage rate hikes and their impact on the housing market. Despite these challenges, home prices have remained high. Bankrate predicts a significant 10% drop in California home prices in 2023 due to its high cost of living.

These forecasts aim to provide valuable insights into the complex and dynamic real estate market, offering guidance to prospective home buyers and investors in the coming years.
downsizing