2023 Spring Housing Market Forecast
It's been a couple of wild years in real estate, and you may be wondering what's in store for the spring 2023 market. Like all forecasts, it’s best to call this our best guess. Statistical data has been provided by BRIGHT MLS chief economist Lisa Sturtevant for the Mid-Atlantic region for us to share with you.
Last year the federal reserve raised interest rates 7 times, however inventory remained low, so prices kept increasing. Unlike the housing crash in 2008 when there was lots of supply, this time we are seeing both buyers and seller’s “sitting it out”. Economists expect the first quarter of the year should be filled with "lurker" buyers, those ready to jump in and look at houses when interest rates drop.
At the moment inventory is up 29% year over year, however that is not a surge in new listings, but a slowdown in contract activity. To say it another way, houses are starting to sit longer on the market. Median days on market in December 2022 increased to 18 days, and that's one week longer than December 2021. BRIGHT MLS expects the total volume of sales to be down another 5% or so this year. That does not sound great, but the second half of 2022 resulted in sales falling by nearly 30% so this is expected to be more of a market correction year. The median sales price has stalled after seeing double-digit price growth, in 2023 prices are expected to remain flat.
The Mid-Atlantic marketplace should prove more resilient than other national markets this year, "comparatively vanilla compared to other markets". So national news you may hear about markets such as California (where prices may fall 20%) are not relevant here.
Sellers need to re-set expectations as buyers have lower purchasing power. Buyers need to digest the rates staying around 6% for the spring market. Buyers and sellers will likely accept the “new normal” and enter the market to choose to move on with their lives. They may have a house with a great low interest rate on the mortgage, but if the house doesn’t meet their needs, we expect people to want to move on and sell / buy and possibly refinance later.
As a means of mitigating higher mortgage costs, rate buy-downs remain a popular incentive. Typically, this is done by sellers contributing to buyers closing costs, and lenders using the funds for points. Seller concessions have increased back to their pre-pandemic levels after effectively no concessions were being offered in most of 2020, 2021, and 2022.
Guerilla Realty is an independent brokerage established in 2014 and a proud member of the National Association of Realtors. This Spring 2023 Forecast is regional, and that means that individual markets may vary. When you’re ready to make some moves, we’re ready to make them happen. Equal housing opportunity.