WHAT EXPERTS ARE SAYING ABOUT THE 2023 HOUSING MARKET
If you’re considering buying or selling a home in 2023, you are likely wondering what you can expect from the housing market this year.
In 2022, the market underwent a major shift as economic uncertainty and higher mortgage rates reduced buyer demand, slowed the pace of home sales, and moderated home prices. According to a recent LendingTree report, “41% of Americans say they now fear a housing crash in the next year” (Realtor Magazine).
Many homeowners still hold dark memories of the 2008 housing crash when property values buckled and foreclosures peaked. While the memory of a sudden catastrophe at a time when the real estate market had been riding high brings up valid reasons for concern, there are several key factors that show how this market differs for 2023.
In fact, experts agree we may see the return of greater stability and predictability in the housing market if inflation continues to ease and mortgage rates stabilize.
5 Reasons Today’s Real Estate Market Differs From 2008
The Labor Market Remains Strong
During the Great Recession, there were 8 million job losses. This time there are virtually none. While the technology and mortgage sectors are experiencing layoffs, they have not accumulated to create a net job loss. One key piece to remember is that a strong job market bodes well for housing’s future.
Less Risky Loans
Subprime loans that were commonplace during the 2008 housing bust are essentially nonexistent today.
During the Great Recession, nearly 10% of all mortgage borrowers fell delinquent on their loans. Today that rate is holding at historical lows at just 3.6%.
Ultra-Low Foreclosure Rates
As property values plunged in 2008, homeowners walked away from their loans, which resulted in foreclosure rates hitting 4.6%. Today, we are also seeing historical lows with the number of homes in foreclosures being at 0.6%. All predictions for 2023 expect foreclosures to remain at the same historically low levels.
Underbuilding and Inventory Shortages
Prior to 2008, new-home construction was averaging 7.65 million units yearly. In 2022, it’s 4.6 million. This has now resulted in a massive housing shortage as a result of a decade of underproduction. As inventory remains low, home prices will remain elevated. In essence, the chance of a price crash is very small due to the lack of supply. The 2023 forecast from the National Association of Realtors (NAR) says:
“While 2022 may be remembered as a year of housing volatility, 2023 likely will become a year of long-lost normalcy returning to the market, . . . mortgage rates are expected to stabilize while home sales and prices moderate after recent highs, . . .”
If you’re looking to buy or sell a home this year, the best way to ensure you’re up to date on the latest market insights is to partner with a trusted real estate advisor.
- Bozeman Real Estate
- Bozeman Subdivisions
- Belgrade Subdivisions
- Bozeman School Districts
- Luxury Homes
- Bozeman Dining
- Contingent vs Under Contract
- Log Homes
- Bozeman Gyms