2023 Housing Market Predictions

Happy Makar Sankranti 2023 (also Pongal and Lohri)! Today many of us are celebrating this auspicious Indian Festival. As you know, Makara Sankranti signifies change. In the second half of the last year, the market started cooling off. Will this year’s Makar Sankranti start a change in the real estate market? Or will the cooling off to continue? 

As a scientist by training, I always like to work with data to guide decision making. The chief economist at NAR (National association of Realtors) recently published some interesting data and predications. Lets look at it.

1. Distressed Home Sales:

Too many of us believe that there is a big inventory of “distressed” properties that is going to hit the market any time and cause a market crash. This does not appear to be true. 

2. Home Sale Numbers 2019 to 2022:

The home sales nationally are already down significantly close to 30%, which is lower than when COVID impact had just begun.

The new homes sales were also down 17% in 2022 to pre COVID levels.

3. Inventory:

The home inventory even though still improving, is still below long terms average.

4. Price Growth Forecasts:

And the housing market is being predicted to start showing modest growth in the later half of the year. This will continue in the next year with 5% growth in home prices.

5. My Summary

This data is consistent with my observations while working with clients and being in the field. There are a lot of buyers waiting for a suitable opportunity to buy. These buyers could not get in due to last two years’ craziness. The inventories remain low as sellers have little motivation to sell. Many of them have locked in good rates and by now have significant amount of equity in the homes. Recent data of home equity CoreLogic shows U.S. homeowners with mortgages (roughly 63% of all properties) have seen their equity increase by a total of over $2.2 trillion since the third quarter of 2021, a gain of 15.8% year over year. The imbalance between supply of homes and number of homebuyers will likely prevent a deep market crash and help market rebound. For these reasons the prediction made for 2023 and 2024 do not appear too far fetched.

There is just one caveat to the above analysis. There are recent concerns about an economic recession. There has been series of layoffs by some tech giants as well as other companies which has heightened the worries of a recessions.

If there is an economic recession then it will obviously have impact on the real estate market. So, all of us need watch the market carefully for next few months. 

If you have been waiting or thinking about getting in market then lets connect. I am happy to discuss and help you navigate this real estate market! And yes, send me your comments and questions in the comments section below.