Experts Forecast a Turnaround in the Housing Market in 2023

The housing market has gone through a lot of change recently, and much of that was a result of how quickly mortgage rates rose last year. Now, as we move through 2023, there are signs things are finally going to turn around. Home price appreciation is slowing from the recent frenzy, mortgage rates are coming down, inflation is easing, and overall market activity is starting to pick up. All of that’s great news for the housing market this year. Here’s what experts are saying. Cristian deRitis, Deputy Chief Economist, Moody’s Analytics: “The current state of the housing market is that it is certainly in transition.” Susan Wachter, Professor of Real Estate and Finance, University of Pennsylvania’s Wharton School: “Housing is going to ease up. I think 2023 will be a turnaround year.” Lawrence Yun, Chief Economist, National Association of Realtors (NAR): “Mortgage rates have fallen in the recent past weeks, so I’m very hopeful that the worst in home sales is probably coming to an end.” Robert Dietz, Chief Economist and Senior Vice President, National Association of Home Builders (NAHB):“. . . it appears a turning point for housing lies ahead. In the coming quarters, single-family home building will rise off of cycle lows as mortgage rates are expected to trend lower and boost housing affordability.” Bottom Line If you’re thinking about making a move this year, a turnaround in the housing market could be exactly what you’ve been waiting for. Let’s connect to talk about the latest trends in our area.

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What Experts Say Will Happen with Home Prices Next Year

Experts are starting to make their 2023 home price forecasts. As they do, most agree homes will continue to gain value, just at a slower pace. Over the past couple of years, home prices have risen at an unsustainable rate, leaving many to wonder how long it would last. If you’re asking yourself: what’s ahead for the price of my home, know that experts are now answering this question, and its welcome news for homeowners who may have been led by the media to believe their home would lose value. Historically, home prices have appreciated at a rate near 4%. For 2023, the average of six major forecasters noted below is 2.5%. While one, Zelman & Associates, is calling for depreciation, the other five are calling for appreciation. The graph below outlines each expert forecast to show where they project home prices are going in the coming year.   To understand why experts are calling for appreciation next year, look to the economics of supply and demand. Dave Ramsey, Financial Expert, says this: “The root issue of what drives house prices almost always is supply and demand . . .”      Two things are driving home prices upward. First, the undersupply of homes on the market is an issue we continue to face in this country. We still don’t have enough homes on the market for the number of people that want to buy them. To further that point, we’re still in a sellers’ market nationally, and in that scenario, home prices tend to appreciate.   Second, millennials are moving through their peak homebuying years. Since they’re the largest demographic behind the baby boomers, demand isn’t going away any time soon.   Bottom Line Experts are calling for home prices to appreciate next year, although at a slower pace than the previous three years. The reason for this is simple. The dynamics of supply and demand are playing out in real estate and will continue for many years to come.

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When you’re selling any item, you usually want to sell it for the greatest profit possible. That happens when there’s a strong demand and a limited supply for that item.

In the real estate market, that time is right now. If you’re thinking of selling your house this year, here are two reasons why now’s the time to list.   1. Demand Is Very Strong This Winter A recent article in Inman News explains: “Spring, the hottest time of year for homebuyers and sellers, has started early, according to economists. . . . ‘Home shopping season appears to already be in full swing!’” And they aren’t the only ones saying buyers are already out in full force. That claim is backed up with data released last week by ShowingTime. The ShowingTime Showing Index  tracks the average number of monthly buyer showings on active residential properties, which is a highly reliable leading indicator of current and future trends for buyer demand. The latest index reveals this December was the most active December in five years (see graph below):   As the data indicates, buyers are very active this winter. Last December saw even more showings than December of 2020, which was already a stronger-than-usual winter. And remember – you want to sell something when there’s a strong demand for that item. That time is now. 2. Housing Supply Is Extremely Low Each month, realtor.com releases data on the number of active residential real estate listings (listings currently for sale). Their most recent report reveals the latest monthly number is the lowest we’ve seen in any January since 2017 (see graph below):   And don’t forget, the best time to sell an item is when there’s a limited supply of it available. This graph clearly shows how extremely low housing supply is today. Even Though Supply Is at a Historic Low, Home Sales Are at a 15-Year High According to the latest Existing Home Sales Report from the National Association of Realtors (NAR), existing-home sales totaled 6.12 million in 2021 – the highest annual level since 2006. This means the market is hot and homeowners are in a great place to sell now while sales are so strong. NAR also reports available listings by calculating the current months’ supply of inventory. They explain: “Months’ supply refers to the number of months it would take for the current inventory of homes on the market to sell given the current sales pace.” The current 1.8-months’ supply is the lowest ever reported. Here are the December numbers over the last five years (see graph below):   The ratio of buyers to sellers favors homeowners right now to a greater degree than at any other time in history. Buyer demand is high, and supply is low. That gives sellers like you an incredible opportunity. Bottom Line If you agree the best time to sell anything is when demand is high and supply is low, let’s connect to begin discussing the process of listing your house today.     The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. Keeping Current Matters, Inc. does not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. Keeping Current Matters, Inc. will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.

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