Snapshot of the Housing Market: Spring 2023
Spring is fast approaching. Along with blooming flowers, singing birds, and warmer days ahead, the real estate market is in for a change. Spring is typically the time that buyers hit the streets in search of their new dream home. How will this spring fare? Are the blistering hot markets of recent years about to come around again? Is the housing market doomed to crash?
Understanding the Spring 2023 Housing Market
With spring around the corner, it is that time again when we do our best to decipher what lies ahead in the real estate market landscape. While the market can be unpredictable, we are compiling the data into a quick snapshot of what to expect in the housing market in the spring of 2023, whether you are a buyer, seller, or real estate agent.
Where Does Supply & Demand Stand?
The housing market is all about the balance of supply and demand, and the spring often involves a slight shift. Like bears coming out from hibernation, buyers traditionally come out in the spring on the hunt for their new home. Especially with the millennial generation making up the median age of first-time home buyers at 32 (and a lot of the years surrounding it), an increase in potential buyers looking for a home is expected.1
Recently, there has been a lack of inventory with fewer houses up for sale and buyers competing for limited options. Forbes notes that the number of houses for sale is the second lowest on record.2 This low comes from a combination of people sitting on low mortgage rates unwilling to sell as well as a slowdown in new home construction over the past several months. While historically spring is when more listings will hit the market, an inventory shortage is still expected.
Those desired move-in ready homes in good neighborhoods are anticipated to be hard to find. Bidding wars on these homes, although not as fierce as in recent years, are likely. On the other hand, less desirable homes could sit on the market.
Prices Should Be Relatively Stable
Some fear a crash or a bubble burst comparable to that of 2008, but that doesn’t seem to be the case. As we spring forward, experts do not expect prices to plunge or skyrocket. Historically, the trend is a slight increase in home prices in the spring after an expected winter lull. Instead, the 2023 spring housing market may have a slight drop in prices after unusual highs in years past.
Of course, there will be some variability largely depending on where someone lives. For example, the prices in the Seattle housing market are expected to go down while prices in the Tampa housing market are expected to go up in 2023.3,4
Even with prices mostly dropping, affordability remains a challenge for many buyers. According to the National Association of Realtors Housing Affordability Index, a score above 100 means homes are more affordable. In December of 2022, the Housing Affordability Index was at just 101.2.5 Being so close to the magic number of 100, some buyers will struggle to afford their dream home this year.
Mortgage Rates Are a Toss-Up
In this uncertain economy, mortgage rates are hard to predict. Earlier this year, 30-year fixed mortgage rates initially dropped just below 6%, but they jumped up again at the end of February to 6.85%.6 Such volatility makes it hard to know the direction they will take next.
Some experts believe mortgage rates will stay between the 6% to 7% range this spring. Other experts are under the impression that mortgage rates have already hit their peak. They are hopeful that mortgage rates could drop down into the 5% range this summer or later in 2023.7
With the uncertainty of inflation and the actions of the Federal Reserve to be determined, only time will tell where mortgage rates will fall this spring and the rest of 2023. That being said, do not expect 3% mortgage rates any time soon.
What Should You Do in 2023?
With such a volatile and unpredictable housing market, it can be hard to know what the next best step is for you. Depending on who you are, there are different approaches you can take to “win” in the real estate market this spring or at least make the best out of your situation.
While the selection for homes is a bit limited and interest rates are nowhere near the wishful 3%, there is a silver lining. The unruly competition and frantic days from the pandemic chaos have started to subside. While you may still find yourself in a bidding war for your dream home, you have more ability to negotiate the terms of the sale.
Depending on the market, you may even find that prices drop, and you are able to afford a home in your desired area. Just remember that with a limited number of houses on the market, not all buyers will be able to find the move-in ready home of their dreams, and you may need to make some concessions. For those worried about high interest rates, refinancing may be an option down the road.
While homes aren’t flying off the market in offers well over the asking prices anymore, now isn’t a bad time to be a seller. Sellers may need to make some concessions and be open to negotiations, but the demand from buyers is still there.
If your home is priced well, in a good location, and close to move-in ready, there is a good chance you could be fielding more than one offer. If you find your house is sitting on the market for too long, it may be worth making some changes. With so many buyers wanting move-in ready homes, those sellers with a fixer-upper may want to investigate doing some renovations. Even some basic pre-listing preparation like painting or deep cleaning could go a long way in the eyes of buyers in a market that has limited inventory.
For those unsure of where to begin or nervous about how to fund these updates, we can help. At Curbio, we offer 0 down and 0% interest until closing to help sellers make the pre-listing updates they need to sell their homes faster and for more.
While the 2023 spring housing market may not be as crazy as the market was in recent years, be prepared for a busy season ahead. Just like with any market conditions, it is your job to help guide buyers and sellers along the way.
For your buyers, it is imperative that you help manage their expectations. Especially if they are interested in more popular neighborhoods, make sure they understand that a bidding war is a possibility. With a limited number of move-in ready homes on the market, you will also want to help them make their offer as enticing as possible.
For your sellers, it is important to keep them levelheaded. Some sellers may have expectations that the offers will come rolling in or that they won’t need to make any compromises at the negotiating table. While a year ago this may have been the case, it is not quite so true anymore.
For those sellers with older homes, you may need to encourage them to make updates before putting their house on the market. It could be as simple as a fresh coat of paint or as big as remodeling the kitchen before selling. Without any updates or touch-ups, their house could be sitting on the market for months. Eventually, they could be pointing fingers at you. Instead of taking the blame, we want to help. At Curbio, we offer a turnkey solution to pre-listing changes and updates. Contact us today to learn more and get started.
- Zillow (2022). Buyers: Results from the Zillow Consumer Housing Trends Report 2022
- Forbes (2023). Home Prices Stabilize As Buyers Get A Jump On Spring Shopping
- Norada Real Estate (2023). Seattle Housing Market: Prices, Trends, Forecast 2023
- Norada Real Estate (2023). Tampa Housing Market: Prices | Trends | Forecasts 2023
- National Association of Realtors (2023). National Association Of Realtors: Housing Affordability Index
- Mortgage News Daily (2023). Mortgage News Daily – Rate Index
- Forbes (2023). Mortgage Rate Predictions For 2023