Real Estate Housing Market

The real estate housing market is a complex and dynamic industry that is constantly evolving. While the future is unpredictable, current trends can provide insights into what we can expect in the housing market in 2023. In this article, we will discuss the key trends that are expected to shape the housing market in the coming years, along with the potential impact of each trend. The housing market is predicted to slow down further in 2023. For sellers, this could be terrible news, but for buyers, it's great.

Yet, there is still the problem of sky-high mortgage rates. The bright side is that if buyers hold off, the supply of homes will increase, putting further pressure on sellers to decrease prices. This would constitute a long-overdue course correction for the housing market. Mortgage rates are skyrocketing. Home sales are declining. Supply is improving. We are witnessing a sharp slowdown in the housing market due to higher mortgage rates.

Trend #1: Increasing Demand for Affordable Housing

The demand for affordable housing is one of the most pressing issues in the housing market. The rise in housing prices, combined with stagnant wages, has made it difficult for many individuals and families to find safe and secure housing. In 2023, it is expected that access to affordable housing will continue to be a challenge. Innovative solutions will be necessary to address this issue and provide affordable housing options for those in need.

Trend #2: Shift toward Suburban and Rural Areas

The COVID-19 pandemic has caused many people to reevaluate their living arrangements, with larger homes and more space becoming increasingly important. This shift in priorities could result in a greater demand for housing in suburban and rural areas, leading to higher prices. This trend is expected to continue in 2023, especially as remote work becomes more prevalent.

Trend #3: Rising Home Prices

Despite the economic impact of the pandemic, housing prices have continued to rise due to limited supply and high demand. While this is good news for homeowners, it could make it more difficult for some individuals to enter the housing market. The trend toward rising home prices is expected to persist in 2023, particularly in urban areas where the supply is limited.

Trend #4: Stricter Mortgage Standards

As the economy recovers and interest rates rise, mortgage lenders may become more cautious about who they lend to. This could make it more difficult for some individuals to qualify for a mortgage and realize their dream of homeownership. Stricter mortgage standards are a potential barrier for those seeking to enter the housing market.

Trend #5: Increased Investment in Technology

The pandemic has accelerated the adoption of technology in the real estate industry, with virtual home tours and digital transactions becoming more common. This trend is expected to continue in 2023, with technological investments helping to streamline the home buying and selling process. Technology could also play a role in addressing the challenge of affordable housing, with innovations such as modular homes and 3D printing.

Hence, the housing market in 2023 will be shaped by economic, social, and technological factors. While predicting the future is never easy, understanding these trends can help individuals and policymakers make informed decisions about the housing market. It is important to address the challenge of affordable housing, as well as the potential barriers to homeownership such as rising home prices and stricter mortgage standards. Technological innovations are also likely to play a critical role in shaping the housing market in the coming years. By keeping these trends in mind, stakeholders can work towards creating a housing market that is equitable, accessible, and sustainable for all.

Housing Market Report for February 2023: Sales Rebound with Record Increase

The housing market made a comeback in February 2023, according to the National Association of REALTORS® (NAR), as existing-home sales surged 14.5% to a seasonally adjusted annual rate of 4.58 million. The report shows that the housing market rebounded after a 12-month slide, with all regions registering a month-over-month increase in sales. However, year-over-year sales were down 22.6%.

Inventory and Supply

The report reveals that the total housing inventory at the end of February was 980,000 units, unchanged from January but up 15.3% from one year ago. Unsold inventory sits at a 2.6-month supply at the current sales pace, up from 1.7 months in February 2022, but down 10.3% from January 2023. NAR Chief Economist Lawrence Yun commented on the inventory, saying that “inventory levels are still at historic lows. Consequently, multiple offers are returning on a good number of properties.”

Home Prices

The median existing-home price for all housing types in February was $363,000, representing a decline of 0.2% from February 2022. However, prices climbed in the Midwest and South while declining in the Northeast and West. The report shows that this ends a streak of 131 consecutive months of year-over-year increases, the longest on record.

Days on the Market

Properties remained on the market for an average of 34 days in February, up from 33 days in January and 18 days in February 2022. Fifty-seven percent of homes sold in February were on the market for less than a month. The increase in the average number of days that properties remained on the market in February 2023 compared to the same period in 2022 indicates that the housing market has shifted from a seller's market to a more balanced or even a buyer's market.

A seller's real estate housing market occurs when there are more buyers than available homes, which drives up prices and leads to faster sales. In contrast, a buyer's market occurs when there are more homes available than buyers, which can lead to longer selling times and lower prices. However, the fact that 57% of homes sold in February were on the market for less than a month suggests that demand is still strong for many properties.

First-Time Buyers and Cash Sales

First-time buyers were responsible for 27% of sales in February, down from 31% in January and 29% in February 2022. The report shows that all-cash sales accounted for 28% of transactions in February, down from 29% in January but up from 25% in February 2022. Individual investors or second-home buyers, who make up many cash sales, purchased 18% of homes in February, up from 16% in January but down from 19% in February 2022.

Single-Family and Condo/Co-op Sales

The report reveals that single-family home sales increased to a seasonally adjusted annual rate of 4.14 million in February, up 15.3% from 3.59 million in January but down 21.4% from the previous year. The median existing single-family home price was $367,500 in February, representing a decline of 0.7% from February 2022.

Existing condominium and co-op sales were recorded at a seasonally adjusted annual rate of 440,000 units in February, up from 410,000 in January but down 32.3% from one year ago. The median existing condo price was $321,000 in February, an annual increase of 2.5%. Distressed sales, which include foreclosures and short sales, represented 2% of sales in February, almost identical to last month and one year ago.

Regional Breakdown: How Existing-Home Sales Fared Across the US in February

Let's take a closer look at how existing-home sales fared in each region of the country in February.

Real Estate Housing Market in the Northeast

Existing-home sales in the Northeast increased by 4.0% in February, with a seasonally adjusted annual rate of 520,000 units. However, year-over-year sales were down by 25.7%, reflecting the impact of the pandemic on the housing market. The median price in the Northeast was $366,100, down 4.5% from the previous year, indicating a slight decline in prices. Despite the decline in prices, the Northeast housing market is still struggling to recover from the pandemic, with low inventory and fewer first-time homebuyers.

Real Estate Housing Market in the Midwest

In the Midwest, existing-home sales rebounded strongly in February, growing by 13.5% from the previous month to a seasonally adjusted annual rate of 1.09 million units. However, sales were down 18.7% from one year ago, reflecting the ongoing impact of the pandemic on the housing market. The median price in the Midwest was $261,200, up 5.0% from February 2022, indicating that prices are continuing to rise in the region. Despite the decrease in year-over-year sales, the Midwest housing market is showing signs of recovery.

Real Estate Housing Market in the South

Existing-home sales in the South saw a significant rebound in February, with sales increasing by 15.9% from January to a seasonally adjusted annual rate of 2.11 million units. However, year-over-year sales were down by 21.3%, indicating the ongoing impact of the pandemic on the housing market. The median price in the South was $342,000, up 2.7% from one year ago, indicating that prices are continuing to rise in the region. The Southern housing market is showing resilience, with strong sales and rising prices.

Real Estate Housing Market in the West

In the West, existing-home sales skyrocketed by 19.4% in February, with a seasonally adjusted annual rate of 860,000 units. However, year-over-year sales were down by 28.3%, reflecting the ongoing impact of the pandemic on the housing market. The median price in the West was $541,100, down 5.6% from February 2022, indicating a decline in prices. Despite the decline in prices, the Western housing market is showing signs of recovery, with a surge in sales and increasing demand for homes.

Summary

The real estate housing market has rebounded from the previous 12-month slide, with all regions of the country experiencing a month-over-month increase in sales. The inventory of unsold homes has increased slightly, but remains at historic lows, leading to multiple offers on many properties. While the median existing-home price declined slightly from the previous year, it increased in the Midwest and South while declining in the Northeast and West.

Properties are also staying on the market slightly longer than they did a year ago, but the majority of homes are still selling within a month of being listed. First-time buyers and all-cash sales both decreased slightly from the previous month, but distressed sales remain low. Single-family home sales saw an increase from the previous month, but still declined compared to the previous year, while condo and co-op sales also increased from the previous month but experienced a significant decline compared to the previous year.

The Northeast and Midwest regions saw sales improve from the previous month, but all regions experienced a decline in sales compared to the previous year. Overall, the report suggests that while the housing market has rebounded from the previous year's slide, it is still experiencing challenges in terms of inventory and affordability.

New Home Sales Increase by 1.1 Percent

According to the latest New Home Sales Report by the Commerce Department, sales of new single-family homes in the US rose by 1.1% to a seasonally adjusted annual rate of 640,000 units in February, the highest level in six months. This is a positive indication that the housing market could be close to finding a floor after being hit hard by higher mortgage rates. Sales in the South and West regions increased, while they fell in the Midwest and dropped by 40.0% in the Northeast. Compared to the previous year, sales were down 19.0% in February.

The report also highlights that the housing market has borne the brunt of the Federal Reserve's aggressive interest rate hikes to curb high inflation. However, recent data suggests that the market may be close to bottoming out. Mortgage rates are falling again, in line with a sharp decline in US Treasury yields following the recent collapse of two US regional banks that sparked fears of contagion in the banking sector.

Despite these positive signs, the report cautions that the housing market is not out of the woods yet. Banks have tightened lending standards, which could make it harder for prospective homebuyers to borrow. The median new house price in February was $438,200, a 2.5% rise from a year ago, and there were 436,000 new homes on the market at the end of last month, down from 439,000 in January. At February's sales pace, it would take 8.2 months to clear the supply of houses on the market, down from 8.3 months in January.

Benefits for Potential Homebuyers

There are a few potential benefits for homebuyers in the current real estate housing market:

• More choices: While the supply of homes on the market is still relatively low, it has increased slightly in recent months. This means that potential homebuyers may have more options to choose from when looking for a home. The number of new homes available on the market also increased in February, which means that potential homebuyers have more options to choose from.
• Slower price growth: Although home prices are still rising, the pace of growth has slowed down in some areas. This could make it easier for homebuyers to afford a home in certain markets.
• Easier negotiations: In a slower housing market, sellers may be more willing to negotiate on the price of their home or other terms of the sale. This could give homebuyers more bargaining power and help them get a better deal on a home.
• Lower prices: While the median price of a new home rose slightly from a year ago, the increased inventory could lead to greater competition among sellers, potentially driving down prices.
• Leading indicator: New home sales are considered a leading indicator for the housing market, meaning that an increase in new home sales could signal a positive trend for the housing market overall. This could be good news for potential homebuyers who may be hesitant to enter the market during a downturn.

In conclusion, the February report suggests some positive signs for the US housing market. Existing-home sales rebounded in the South and West, and new home sales rose to a six-month high, indicating a possible recovery from the recent slump caused by the Federal Reserve's aggressive interest rate hikes.

However, the market is not out of the woods yet, with tight lending standards potentially limiting access to credit for homebuyers. The median home prices varied across regions, with some areas experiencing modest growth and others seeing a decline. Overall, the report provides a cautiously optimistic outlook for the US housing market.

Even with rising mortgage rates and higher prices, the housing market cannot crash due to low supply and increasing demand as more millennials are projected to buy houses in the years to come. Now millennials make up the largest share of homebuyers in the US, according to a 2020 survey from the NAR. According to a new study by Realtor.com, buying is more cost-efficient than renting in a growing number of the largest cities in the country.

This is encouraging news for the millions of millennials who are approaching the peak homebuying age. Millennials are the largest generation in history, and they are already in their mid-thirties, approaching their prime home-buying years. They were delayed in purchasing a home, but are now back in full force. Thus, we have two, four, or five years of millennial homeownership.

Sources:

• https://www.realtor.com/research/
• https://www.zillow.com/home-values/
• https://www.bankrate.com/mortgages/todays-rates/
• https://www.nar.realtor/research-and-statistics/housing-statistics/
• https://www.nar.realtor/research-and-statistics/housing-statistics/housing-affordability-index