The housing market went through the ringer in 2022, as rates surged and pushed buyers out of the market
The housing market is nothing if not unpredictable.
Mortgage rates have skyrocketed, and the housing market has taken a beating. But don’t expect 2023 to turn into a buyers market just yet, according to housing experts.
Home sales have plummeted across the board. Sales of existing homes have dropped for 10 months in a row, which is a new record. And home price growth has stalled.
Will 2023 will be a good year for a prospective buyer? It depends on your location, your income, and whether you’re a buyer or seller, Odeta Kushi, deputy chief economist at First American, told MarketWatch.
Others are less diplomatic. “2023 will shape up to be a nobody’s market. Neither sellers nor buyers will see any significant headway,” George Ratiu, manager of economic research at Realtor.com, told MarketWatch.
“For sellers, the reality is that the prices that they were hoping to get based on the last few years are simply no longer there,” he explained. “For buyers, prices have shot up so high in the last two years that even a 10% to 20% discount is not going to get them a bargain.”
Here’s how experts see the housing market play out in 2023:
Good news: More homes for sale
The experts mostly agree that inventory — or the number of homes available for sale — will increase in 2023.
“We will have more inventory than in the last two years,” Ratiu said. But homes for sale are staying on the market longer, he added.
Redfin’s RDFN, 8.86% deputy chief economist, Taylor Marr, said that the typical home has been sitting on the market for about two months now. “There are a lot of homes out there just waiting for a buyer,” he added.
Builders are also putting new homes on the market, and are pulling out all the stops to boost sales.
In some markets out West, expect “much more inventory than before the pandemic,” Jeff Tucker, senior economist at Zillow Z, 2.81%, told MarketWatch.
Markets like Phoenix and Las Vegas, which saw a boom in sales during the pandemic, are experiencing a glut of homes
Markets like Phoenix and Las Vegas, which saw a boom in sales during the pandemic, are experiencing a glut of homes, Tucker said. “There are a lot of homes on the market, and that does put downward pressure on prices,” he added.
In most of the big markets, inventory is low due to a couple of reasons.
“There is less inventory because homeowners are unwilling to give up their ultra-low mortgage rates,” Lawrence Yun, chief economist and senior vice president of research at the National Realtors Association, told MarketWatch.
“Most people refinanced into an approximately 3% rate in 2020 and 2021,” he added. “Selling and buying a new home means having a 6.5% mortgage rate, so even a trade-down in home size and price will mean a higher monthly mortgage payment.”