Zillow’s 2023 Real Estate Predictions
By: Jenny Montoya · December 08, 2022 · Reading Time: 3 minutes
Homebuying: American Dream or Pipe Dream?
Online housing marketplace Zillow (Z) recently published a report of its major real estate predictions for 2023. Here are the key takeaways.
To those in the US who are struggling just to pay rent, the thought of buying a home is a mere pipe dream. Meanwhile, the cost of renting has rapidly outpaced wages. Over the past five years, the average hourly wage is up 23%, while rents have soared 37% over the same period. For this reason, the share of income required to pay rental costs has become a serious issue. To top it off, the recent rise of mortgage rates has made it more expensive to buy a home as well.
Considering the fact that many of these issues arose during or due to the pandemic, there could be a potential shift in sight. With things beginning to trend more toward normal, Zillow expects market forces to stabilize housing affordability over the coming months.
The real estate tech company also anticipates a migration to the Midwest, which is the one region where prices have yet to get out of hand. States like Ohio, Kansas, and even upstate New York could experience an influx of homebuyers in the coming year.
To compensate for the affordability crisis, consumers are getting creative with how they go about buying a home. Specifically, some are partnering with others to split the costs.
Zillow’s research found that 18% of those who purchased a home in 2022 did so with a partner other than their spouse. Additionally, 19% of prospective homebuyers expressed intention to buy with a friend or relative in the coming year.
Both groups cited housing affordability and difficulty qualifying for mortgages as their main reasons to join forces.
In 2023, the country may also see a surge in first-time landlords. This is because many mom-and-pop investors bought second homes during the pandemic, when mortgage rates were at a record low. Now, with rent prices on the rise, Zillow expects these homeowners to capitalize.
Over the past few years, it’s likely your housing situation may have either dramatically improved or deteriorated. Luckily, however, the pandemic — and the chaos it brought with it — appears to be behind us. Hopefully, this means that the market will stabilize, helping to make the American Dream more affordable again.
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