switching gears now to the housing market after a year of inflation,
rising interest rates and mortgage rates as well,
buying a home can seem nearly impossible.
So what's in store for the housing market in the new year?
Well, joining us now to discuss is lisa Sturtevant,
chief economist at bright mls lisa, thanks so much for joining us this morning.
What are your predictions for the housing market in 2023?
Is it gonna be a slightly better time to buy?
Ah Well,
I think that we will see that buyers are gonna
have more options in 2023 than they did in 2022.
Look like you said,
the last couple of years have been just this crazy
frenzied housing market with buyers facing really stiff competition.
Multiple offers offers over list price is rising at double digit rates.
You know, we had to see that type of frenzied market slowdown.
And so as we head into 2020 Three,
I do think we'll start to see mortgage rates stabilize, come down a little bit,
we'll start to see buyers have a little bit more leverage in the transaction.
But affordability is still going to be a challenge for buyers
and really it's still going to be a seller's market.
Even when we head into 2023,
let's talk about inventory.
We know that inventory,
especially for single family homes has been pretty tight for quite some time.
Will this continue to be an issue in 2023?
Yeah,
we hit rock bottom lows on inventory during the
pandemic as the sort of low mortgage rates fueled,
significant demand in the market.
And home would be listed on the market.
And then by the end of the day would be would be would have multiple offers.
Over the last few months we've started to
see inventory rise just a little bit but we're
still at pretty low levels and there's there's
some structural reasons why inventory has been low.
Like you said for several years, we're seeing that baby boomers,
for example are remaining in their homes longer.
We've seen for the last decade really uh Two
little new construction to keep up with demand.
So when we move into 2023 we will start
to see a little bit more inventory coming online.
But it's still gonna be relatively low compared
to what we need really to meet demand.
I do want to ask you know kind of piggyback on
that question to ask you about new construction as well.
You know this will be the first year since 2011
where we've actually seen a decline for single family starts.
You know, what is this telling us about the health of the US housing market,
particularly as you kind of were indicating there the demand is still pretty high.
Yeah.
Well you mentioned this the first time we've
seen a decline in new construction and it is
also this really unprecedented a couple of years where
homebuilders were facing rising material costs really unusual.
Supply chain issues along with all the other
constraints on on the new home building market,
including a lack of labor, difficulty Finding buildable lots.
And so all of those challenges really compounded during the last couple of years.
And and frankly,
homebuilders are remembering the housing market downturn of 2008,
and so they are being really cautious.
As we move through this transitioning market,
we've seen builders um slow down the pace
Of home building as buyer traffic has eased.
We've seen more incentives, we've seen some price cuts,
but you'll notice that we aren't seeing huge,
dramatic cuts in home prices on the from home builders.
They're really sort of waiting,
looking ahead to 2023 and being really cautious
as we move through this transition now,
as we look ahead to the new year,
what are some key indicators that you're going to be
watching out for in the state of the housing market?
Yeah.
You know,
I really think the key thing that we should be watching is um
the actions by the Federal Reserve and how the labor market responds.
There are a lot of fears, right,
As the Federal Reserve began raising interest rates,
that the labor market would be really negatively impacted,
and we would see unemployment rates rising and job cuts coming so far the job market,
aside from Some very high profile layoffs, the job market's been fairly resilient.
So as we move into 2023, um continuing to look at whether unemployment stays low,
whether wage growth continues and whether employers continue to add jobs.
That will be a really important sign that maybe we are heading in for a soft landing,
avoiding a recession and setting ourselves up for
a really stable housing market in 2023.
All right, lisa, thanks so much for joining us this morning.
That's lisa Sturtevant, chief economist at Bright, MLS.