Real Estate Landscape: A 2028 Homebuyer’s Guide

The real estate market has been a rollercoaster ride in recent years. From a red-hot market with record-low interest rates and fierce bidding wars, we’ve seen a significant shift. Mortgage rates have soared to their highest levels in over two decades, causing a slowdown in buying activity. Yet, with limited inventory, many parts of the U.S. continue to face unaffordable home prices.

While there are predictions for the housing market in the near future, it’s crucial to consider the long-term when planning to buy a home. In this article, we’ve consulted industry experts to provide a forecast for the next five years, looking ahead to 2028.

The Current Housing Market

Home Sale Prices: As of July 2023, the median existing-home sale price stood at $406,700, a record high for July. New-construction homes were slightly higher at $436,700.

Inventory: While inventory has increased compared to the previous year, it remains low. In July, the unsold existing home inventory had a 3.3-month supply, far below the balanced market requirement of 5-6 months.

Days on Market: High mortgage rates have extended the time it takes to sell a home. In July, the median time on the market was 20 days, up from 14 days the previous year.

Homes Sold: The number of existing home sales has declined by over 16% year-over-year in July, as homeowners hold onto lower mortgage rates. In contrast, sales of new single-family homes increased by 4.4% in July.

Mortgage Rates: In late August, the average 30-year mortgage rate reached 7.32%, the highest since 2001.

Forecast for Mortgage Rates and Types

Mortgage interest rates are expected to continue increasing in the short term, possibly hovering around 7% through most of 2024. Over the next two years, rates are predicted to return to around 5.5% to 6%. Adjustable-rate mortgages may gain popularity in the short term due to high rates, but in the long run, the 30-year fixed-rate mortgage is expected to remain dominant due to its stability and investor appeal.

Predictions for Home Prices

Experts foresee modest fluctuations in nationwide home prices over the next year, with changes of approximately 5% in either direction. California, with its high prices, may see a 10% decline due to its sensitivity to interest rate changes. However, in five years, home prices are expected to appreciate by a total of 15-25%.

Is a Housing Market Crash Likely?

While the housing market may exhibit bubble-like characteristics, experts do not anticipate a crash. Factors such as limited inventory and stricter lending standards make a significant downturn unlikely. A true crash typically involves oversupply, which is not currently the case.

Shift to a Buyer’s Market

The seller’s market is expected to persist as long as housing inventory remains scarce. However, experts anticipate a shift towards a more balanced market within the next five years, where neither buyers nor sellers hold a significant advantage.

Where Will New Homes Be Built?

Suburban markets are expected to remain strong, driven by the rise of hybrid work schedules and reduced commuting needs. Areas with growing populations, including the Carolinas, Florida, Texas, and Tennessee, are likely to see increased growth in home construction.

Multi-family home construction has grown in recent years due to lower costs and increased demand for affordable housing. However, experts predict this growth will stabilize as mortgage rates and building material prices rise.

Preparing to Buy a Home by 2028

If you’re planning to become a homeowner by 2028, it’s essential to start preparing now. Here are some strategies:

Increase Earning Power: Consider job changes or negotiation for a higher salary to boost your income.

Reduce Debt: Pay down credit card balances, student loans, and car payments to lower your debt-to-income ratio.

Improve Credit Score: Aim for a higher credit score to secure a lower mortgage rate.

Local Focus: Pay attention to local real estate conditions, as they can vary significantly even within the same city.

FAQs

What trends are shaping the real estate landscape in 2028?

The real estate landscape in 2028 is influenced by several key trends, including sustainable housing designs, smart home technology integration, and the rise of co-living spaces. Additionally, there’s a growing emphasis on community-centric developments with amenities such as green spaces, communal work areas, and shared transportation options.

How has technology impacted the home-buying process in 2028?

Technology has revolutionized the home buying process in 2028, offering virtual reality property tours, AI-driven property matching algorithms, and blockchain-based transactions for enhanced security and transparency. Homebuyers now have access to vast amounts of data and tools to streamline their search, evaluation, and purchasing decisions.

What should homebuyers consider when investing in real estate in 2028?

Homebuyers in 2028 should prioritize factors such as location resilience against climate change, access to sustainable infrastructure, and the potential for future property value appreciation. It’s crucial to assess not only the immediate features of a property but also its long-term viability and adaptability to changing market dynamics.

Are there any emerging housing trends that homebuyers should be aware of in 2028?

Yes, emerging housing trends in 2028 include the growth of mixed-use developments that combine residential, commercial, and recreational spaces within the same community. Additionally, there’s a rising demand for modular and adaptable housing solutions to accommodate changing lifestyle needs and demographic shifts.

How can homebuyers navigate the complexities of financing in the real estate market of 2028?

In 2028, homebuyers can explore a variety of financing options tailored to their specific needs, including green mortgages for eco-friendly properties, shared equity arrangements, and crowdfunding platforms for real estate investment. Working with experienced financial advisors and leveraging digital tools for financial planning can help homebuyers make informed decisions in today’s dynamic market.

Conclusion

As the real estate market continues to evolve, prospective homebuyers should remain vigilant and proactive in their preparations. While challenges exist, a carefully planned approach can help you achieve your homeownership goals by 2028. Remember that the real estate market is dynamic, and staying informed is key to making sound decisions on your path to homeownership.