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- US house prices will rise nearly 6% this year, an award-winning real estate forecaster predicts.
- Home values will rise by 3% to 7% over the next one to three years, Barry Habib says.
- Habib expects the Fed to cut interest rates, reducing mortgage costs and boosting housing demand.
US house prices will jump nearly 6% this year, and keep climbing for the next few years, an award-winning forecaster predicts.
Barry Habib is a three-time winner of the Zillow and Pulsenomics Crystal Ball Award for the most accurate real estate forecaster out of 150 top economists. He expects home values to rise by 5.8% in 2023 — and between 3% and 7% annually, depending on market, for the next one to three years — he said during a Rosenberg Research webcast this week.
"I'm not saying that real estate values go to the Moon," Habib said, noting yearly appreciation of 5% to 6% isn't far off historical norms.
"There's reason to believe that there's upward pricing pressure over the next 12 months," the CEO of MBS Highway continued. "And it does continue to look good for the next couple of years."
The housing expert sees falling inflation and a "recession-like slowdown" this year spurring the Federal Reserve to reduce interest rates. The US central bank has hiked rates from virtually zero to north of 5% since last spring. That has pushed up mortgage costs, and deterred homeowners who've locked in cheaper, fixed-rate mortgages from selling.
"We see incomes increasing to help affordability, very tight inventory, and look, rents are still no picnic," Habib said. Mortgage rates, which are hovering around 7% currently, should drop by 1% or more in the next few months, he added.
The real estate guru estimated there's a shortage of about 1.5 million homes in America, meaning demand significantly outstrips supply and should shore up prices. He also dismissed concerns of a housing bubble, noting the "crazy, insane lending standards" that drove prices to dangerous highs in the mid-2000s aren't present anymore.
Habib warned that home values could fall if a black-swan event spikes inflation, forcing the Fed to sharply hike rates. Market jitters could also drive mortgage rates higher, or a severe downturn and surge in joblessness could dampen housing demand, he said.
"But absent a deep recession, very high rate of unemployment, and interest rates moving up," the outlook for home values is bright, he said.