Real Estate Marketing & Beyond
The US housing market has been on a roller coaster ride in recent years, but it appears to be recovering in 2023. After a sharp decline in prices in 2022, home values have started to rebound. The main culprit behind this? Inventory levels are at an all-time low, and there doesn’t seem to be any relief in sight for anyone looking to find more affordable properties.
There are a few reasons for this recovery. First, mortgage rates, while still higher than they’ve been since before the pandemic, have fallen from their peak in 2022, making it more affordable for buyers to purchase a home. Second, the supply of homes for sale has remained low, which has created a bidding war among buyers. Third, many homeowners are staying put, rather than selling their homes and moving, due to the uncertainty in the economy.
As a result of these factors, the US housing market is now in a state of equilibrium. Home prices are rising, but not as quickly as they were in 2021. And inventory levels are still low, but they are not as low as they were in 2022. The result has been, according to data from Redfin, that the market hit a record high in June of 2023 with a total valuation of $47 trillion. This equilibrium is good news for homebuyers, who are finally starting to get a break after years of nearly runaway prices.
While this is potentially good news, it is essential to note that the housing market is still volatile, and prices could start to fall again if mortgage rates rise or if the economy takes a turn for the worse. The US Federal Reserve might have slowed down its base rate increases, but it hasn’t ruled out doing so again in the future - and every time the Fed raises rates, lending gets more expensive across the board.
Still, it is marginally more affordable for buyers to purchase a home than it was during the early panic days of the Fed rate hikes. This has made it more affordable for buyers to purchase a home in 2023, helping to fuel the recovery of the housing market. Yet with the inventory of homes for sale remaining at an all-time low, this means that there are fewer homes available for buyers to choose from, which has created a bidding war and driven up prices. As a result, many homeowners have decided to stay put rather than sell their homes and move due to the uncertainty in the economy. This has also contributed to the low inventory of homes for sale.
The incipient recovery in the US housing market spells potential good news for homebuyers, but it is critical to be aware of the risks involved. The housing market is still volatile, and prices could start to fall again if mortgage rates rise or if the economy takes a turn for the worse.
If you are looking to purchase a property right now, be prepared to act quickly. Homes are changing hands swiftly in today's market, so be prepared to put in an offer as soon as you find a home you like. Additionally, you may need to accept that you very well may need to pay above asking price, especially in the case of a bidding war on that property. Above all else, though, remain patient. The housing market is still volatile, so don't get discouraged if you don't find the perfect home right away.
