We don’t have to tell you how times have changed in just one year.
As we entered 2022, the real estate sector was riding high on one of the hottest markets in history. Then came the summer slowdown when things seemingly overnight started to cool considerably, leaving us facing this new year with the housing industry looking flat as a pancake as it tilts from a seller to buyers’ market.
As of the end of November 2022, the number of newly listed homes for sale dropped 21% from a year earlier, the largest decline since May 2020. Homes are staying on the market longer now (an average of 36 days)1 at a time when there are still more agents than ever trying to sell homes.2
As we’re sure you have, we’ve been closely following annual forecasts to see what housing analysts and researchers are predicting for 2023.
Unfortunately, that’s looking like more of the same as the market continues to adjust and adapt to current economic trends, inflation and recession concerns. In its annual outlook, the Mortgage Bankers Association (MBA), which does expect a recession in the first half of 2023, said it’s going to be “a tough year for the broader economy as well as the housing and mortgage markets.” Takeaways from its December 2022 forecast also included:3
- A “flat” path for the national home price index with several quarters of year-over-year declines in the level of national home prices through 2023 and 2024.
- Mortgage origination volume dropping about 15% compared to 2022 to about $1.9 trillion with $1.45 trillion in purchase originations and $449 billion in refinances for 2023.
- New home sales will average at a 616,000 unit annual pace in 2023, a 4% decrease from 2022, and 4.5 million in existing home sales, a decline of almost 13%.
The MBA’s forecast echoes those of many others. In an article last week, Fortune reported on 27 home price predictions from the nation’s leading housing researchers,4 including the MBA, Realtor.com, CoreLogic, NAR, Freddie Mac, Fannie Mae, Goldman Sachs and others. From that group, the magazine found four project home prices to increase this year while the other 23 expect prices to continue to fall.
But there are some silver linings. The MBA also expects 2023 “should ultimately bring lower mortgage rates” (predicting 30-year mortgage rates will end 2023 at 5.2%) and “a return of housing demand as millennial first-time buyers enter the market in earnest.”
“While 2023 is likely to bring lower mortgage rates,” said J.R. Samsing, Vice President of Offerpad Home Loans and Buyer Expert, “I would not advise buyers to wait for this to happen. We’re currently experiencing one of the best buyer markets we have seen in the last several years. Now is the time for homebuyers to act when they have the greatest leverage. When rates go down, buyers can always refinance, and Offerpad Home Loans offers zero lender fee refinancing for up to three years for any homebuyer who uses us to purchase a home.”
What’s the old saying? When the going gets tough, the tough get going. So if you’re planning on toughing it out to keep your business going as the market continues to shift, we’re here to help.
Our Agent Partnership Program serves as a resource for agents as they continue to evolve and adapt to new market conditions. We want to help you and your clients overcome many of the obstacles that come with the traditional real estate process.
“Although the outlook for this year may seem daunting,” says Debra E-Leon, Offerpad’s Lead Director of Partnerships, “people are still buying and selling homes. And that’s something that will always remain true.”
Another constant, Debra continues, is “Offerpad is here to continue to support the agent and broker community with an alternative solution to help meet the needs of their clients, while still enabling you to receive a full 3% referral fee even in the changing climate.”
As we power into 2023, we’ll continue to support you in the ebb and flow of the economic and real estate climate. Let us know how we can help and best of luck to you in the New Year!
1 Battison,James. 37% of real estate agents in the US couldn’t afford to pay their rent in November — yet another bad omen for the housing market. 3 crucial takeaways for sellers right now. Dec. 26, 2002. yahoo.com
2 https://www.realtrends.com/articles/there-are-more-realtors-than-ever-and-few-homes-to-sell/
3 Fratantonie, Mike and Kan, Joel. MBA Forecast Commentary: December 2022.
4 Lambert, Lance. Something big is happening in the U.S. housing market—here’s where 27 leading research firms think it’ll take home prices in 2023. Jan. 5, 2023. msn.com.