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 gonna 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 home builders 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 difficulties
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.