Real estate experts have warned buyers to avoid Sun Belt states where prices could fall next year — and instead focus on the Midwest and Northeast.
With mortgage rates remaining consistently high at 6.7% and US home sales fall for 10 consecutive monthsRedfin chief economist Daryl Fairweather said the hot markets of Austin, Phoenix and Vegas would likely see prices fall in 2023.
“If you want to avoid a situation where you buy a house and then it goes down in value over the next two months, I would avoid the Sun Belt,” Fairweather said. fox business.
Instead, the real estate expert said the safest investments would be in “the Midwest and Northeast, as these areas tend to hold their value.”
Real estate experts have advised homebuyers to avoid Austin, Phoenix, Las Vegas and other Sun Belt locations as prices are likely to fall in 2023, and instead invest in the Midwest and Northeast where homes retain their value.
Fairweather specifically cited Lake County, Illinois; Chicago; Albany, New York; New Haven, Connecticut and Milwaukee.
While the Sun Belt states have seen a real estate boom At the start of 2022, falling sales hit the region harder than most, according to the latest figures from Redfin.
Among the country’s most popular cities, Las Vegas, Phoenix and Austin lead the impending decline in sales. Vegas sales fell 63.8% in November from a year earlier, with Phoenix down 58% and Austin down 57.7%.
Overall in the United States, sales of existing homes fell 7.7% from October to November, according to the National Association of Realtors – and November sales fell 35.4% year-over-year.
The NAR added that the current streak of ten-month declines is the longest on record in data dating back to 1999.
Phoenix, Las Vegas and Austin have seen the largest declines in home sales among the most populous metropolitan areas in the United States. Pictured: A $400,000 home in Phoenix
Meanwhile, experts predict a steady market up north, particularly in Lake County, Illinois, where a price of $299,000 is well below the national median home price.
Austin has seen home sales plummet 57.7% since last November, with the median price of a home in the Texas city pegged at $540,000.
Vegas led the nation’s major cities in declining sales, with a 63.8% drop. Pictured: A Vegas home for sale for $380,000
With the market struggling, Fairweather advised buyers to look to the Midwest and Northeast, where many cities have homes for sale below the national median price index.
According to the latest figure, the national median home price fell to $415,000 in November, a notable drop from the $450,000 seen in June, when the market was more volatile.
Lake County’s median home price currently sits at $309,000, with Albany at $227,750 and New Haven at $245,000. Milwaukee has a median price of $180,000 and Chicago sits at $310,000, all below the national index.
“These will be the types of investments that will really hold their value because people will always want an affordable option,” Fairweather told Fox.
Meanwhile, Austin’s median price sits at $540,000, with Phoenix and Las Vegas hovering near the national index at $408,000 and $385,000, respectively.
Despite the warning to avoid the Sun Belt in 2023, Fairweather predicted states would eventually see a rebound when the market stabilizes.
“While it may be a little over-inflated now, there’s going to continue to be strong demand for these places long term,” she said.
Homes are expected to hold their value in cities like Albany, where this three-bedroom, two-and-a-half-bathroom home costs just $299,000.
Chicago homes are also below the national median price. Pictured: A house for sale at $315,000
New Haven is another key area to invest in. Pictured: A four-bedroom home for $250,000 in town
Pictured: A four-bedroom house in Milwaukee for sale for just $170,000
Existing home sales fell about 37% from their recent peak in January as near-zero interest rates kept mortgage rates low.
The 30-year mortgage rate, which rose above 7% in the first weeks of November, eventually fell and averaged around 6.7%, down 6.9% from October. .
The current rate remains more than double the 3.1% it was at the end of 2021.
As the Central Bank continues to raise interest rates to curb inflation, the housing market continues to cool.
The national median home price fell to $415,000 in November, a notable drop from the $450,000 seen in June
The existing home sales rate has fallen 35.4% since January
The 30-year mortgage rate fell slightly in November to 6.7% from 6.9% in October.
Slowing economic growth in the sphere of domestic purchases, including renovations, furnishings and landscaping, in addition to actual home buying, is a key tenet of the Federal Reserve’s plan to slow down the US economy.
The Fed recently indicated that it will continue to raise rates through 2023, and the fed funds rate, which is currently 4.25-4.5%, will likely reach a range of 5-5.25% by the end of 2023. The current rate is the highest in 15 years.
The Wall Street Journal Remarks that because homes are typically under contract one to two months before the contract closes, the November home sales data largely reflects purchases made in September and October.
While higher mortgage rates are reducing some of the demand from homebuyers, supply is also being hit as homeowners who are locked into buying at lower rates are discouraged from putting their homes up for sale.
Technically, the number of homes for sale has increased since this time last year because homes are staying on the market longer.
“We have this weird market where there are fewer buyers and fewer transactions, but due to the limited supply, some multiple offers are still going on and houses are still selling pretty quickly,” Yun said.
There were 1.14 million homes for sale or under contract at the end of November, down 6.6% from October and up 2.7% from November 2021.
If the current buying pace continues, there was a 3.3 month supply of homes on the market at the end of November.
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