As the winter of 2022 approached, borrowing costs continued to surge and housing demand dwindled, resulting in a nationwide drop in home prices of 2.5% from the spring peak and larger cumulative declines of 8% to 12% in markets on the West Coast and in the Mountain West.[0] Selma Hepp, deputy chief economist at CoreLogic, suggests this deceleration of home prices could be attributed to weaker housing market demand, stemming from higher mortgage rates and an overall pessimistic economic outlook. Despite these declines, eight markets have seen home prices decline on a year-over-year basis, and a recent relief in mortgage rates is likely to spur back some of the lost homebuyer demand and help invigorate home prices as well.
The median existing-home price for all categories dropped to $366,900 by the end of the year, a 2.3 percent increase from the same time the year before according to the National Association of Realtors (NAR).[1] In December 2022, home prices nationwide, including distressed sales, had risen 6.9% from December 2021.[2] On a month-over-month basis, home prices declined by 0.4% in December 2022 compared with November 2022.[3]
A further 15% drop in home prices would begin to approach losses seen during the mid-2000s housing bubble, when US home prices dropped about 27%, according to the S&P CoreLogic Case-Shiller US National Home Price NSA Index. Market analyst Ian Shepherdson has suggested that, due to the wide gap between home prices and buyer incomes, property values could drop another 15% by 2023. Goldman Sachs has revised their projection of US house prices, now expecting a bottoming out this summer with a decrease of 6%, as opposed to the previously predicted decrease of 10%.[4]
The current state of the housing market has people asking: Has the seller’s market been replaced, and is the power now in the hands of buyers?[5] Mortgage rates having stabilized, buyers who had been waiting on the sidelines at the end of 2022 are now venturing into the market.[6] Home shoppers will find the market to be much less competitive than in past times due to increased inventory and more chances for negotiation.[7]
In February 2023, the Federal Reserve continued to raise rates with the most recent hike.[8] This most recent interest rate hike of 0.25 percent was the smallest in 11 months, even though further rate increases are still being implemented.[8]
0. “CoreLogic updates its home price risk assessment for 392 U.S. housing markets” Fortune, 4 Feb. 2023, https://fortune.com/2023/02/04/housing-market-corelogic-odds-of-falling-home-prices-through-november-2023
1. “Will the housing market crash in the US in 2023? Here’s what the experts say” AS USA, 6 Feb. 2023, https://en.as.com/latest_news/will-the-housing-market-crash-in-the-us-in-2023-heres-what-the-experts-say-n/
2. “Here’s what’s happening with home prices as mortgage rates fall” CNBC, 10 Feb. 2023, https://www.cnbc.com/2023/02/10/home-prices-mortgage-rates-fall.html
3. “California, United States Luxury Real Estate Home” California Listings, 8 Feb. 2023, https://californialistings.com/2023/02/08/national-home-prices-increased-6-9-percent-annually-in-december
4. “Goldman Sachs makes a bold housing market call” Yahoo! Voices, 6 Feb. 2023, https://www.yahoo.com/now/goldman-sachs-makes-bold-housing-083824614.html
5. “Seller’s Market, Buyer’s Market, ‘Nobody’s Market’? The Weird State of Housing Right Now” Realtor.com News, 10 Feb. 2023, https://www.realtor.com/news/trends/sellers-market-buyers-market-nobodys-market-the-weird-state-of-housing-right-now/
6. “Here’s What Housing Experts Anticipate in a Cooling Winter Market” Pro Builder, 7 Feb. 2023, https://www.probuilder.com/heres-what-housing-experts-anticipate-cooling-winter-market
7. “Buyers Have More Options in 2023, But Sellers Are Still (Mostly) in Control” RisMedia.com, 8 Feb. 2023, https://www.rismedia.com/2023/02/08/buyers-have-more-options-2023-sellers-still-mostly-in-control/
8. “The Winter Housing Market: Predictions for 2023” RealtyBizNews, 8 Feb. 2023, https://realtybiznews.com/the-winter-housing-market-predictions-for-2023/98775746