These Prices Are Expected to Come Down This Year
They say that anything that goes up must go down, but last year inflation made that hard to believe. While not all prices that rose in 2022 are expected to come down this year, some will. In 2022, inflation peaked at 9.1% in June and has been declining since then. Along with inflation, the consumer price index (CPI), which measures the change in prices paid by consumers for goods over time, is still higher than in November 2021 compared to November 2022, but it is growing at a slower pace. speed .
According to experts, all this means that prices for some products will fall in 2023. Here are some of the more important ones that you should be aware of.
House prices will fall in 2023
According to the S&P/Case-Shiller Index , which measures the cost of individual housing in the United States, home values peaked in June 2022 and declined over the next four months (latest available data). Artificially raising mortgage rates by the federal government has pushed away potential homebuyers, leading to lower home prices, according to Rick Newman, senior columnist for Yahoo Finance.
Don’t expect prices to fall like the real estate bubble burst in 2006, which fell 27% according to Fortune. Prices fell just 3 percent after a 26 percent spike during the pandemic, Newman said. Instead, Newman sees a 10% drop in 2023 as possible.
Rent will drop this year
As with mortgages, rents are expected to fall in 2023 as rising interest rates slow down real estate demand. The Zillow Observed Rent Index , which measures changes in asking rent over time, fell for two consecutive months from September to November, Newman said, and he believes it will continue to decline in 2023. Don’t expect massive rental discounts. We are currently paying 25% higher rents than before the pandemic, and rents are down only half a percentage point from last year’s peak. But we can expect the trend to continue.
New cars
The shortage of microchips in 2020 affected the production of many new cars, and the consequences of this are still being felt. According to the Kelley Blue Book , the average price of a new car in the US has skyrocketed during the pandemic to $49,000 and is up 6.3% in 2022 compared to the previous year. But there is hope for 2023 . “The semi-deficit is now decreasing,” Newman said. “There is still pent-up demand for new cars, meaning that sales could remain strong in the first half of 2023, with prices coming down but not down. However, by the second half of the year there could be a glut of new cars and prices could drop to more normal levels.” JP Morgan expects a decline of 2.5% to 5% in 2023 .
Used cars
The used car market is responding to the new car market. The more new cars there are, the bigger the stock of used cars will be. Like new cars, the used car market has been hit by a shortage of microchips, and many people who couldn’t afford the high prices of new cars during the pandemic have seeped into the used car market and cut supply. But as the new car market is expected to gradually improve, so will the used car market. According to Jerry’s report, don’t expect it to recover to pre-pandemic levels until 2025 , but it will decrease slightly. Used car prices are expected to fall by 10-20% in 2023, according to a JP Morgan report.