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Chicago realtor Jeremy Fisher headed to Florida after Christmas counting on five mostly-relaxed weeks, after a slow second half of 2022 left him with a bunch of unsold listings exiting the year.

Instead, the Compass broker ended up flying back to the Windy City three times during his low season, as seven homes went into contract and his husband ended up driving their baby home from Florida alone. The great real estate bust, it seems, has found something like a floor.


“For somebody, it’s always the right time to buy a house,” Fisher said. “People for the most part have come to terms with interest rates.”

After only a few months in the tank, is the U.S. housing market close enough to a bottom that it’s time for those on the sidelines to at least start thinking about buying as spring shopping season nears?

Signs are accumulating that the big price bust — and mortgage-rate relief — that buyers wanted isn’t materializing, at least not soon.

Goldman Sachs trimmed its estimate of peak-to-trough declines in nationwide home prices to 6 percent from 10 percent in late January. Online housing marketplace Zillow now expects prices to rise slightly in 2023. Existing home sales, which were running at a 6.5 million annual pace in early 2021, have begun to stabilize around 4 million, with the National Association of Realtors forecasting 4.8 million for the year. Meanwhile, mortgage rates, which dipped under a 6 percent national average on Feb. 2 after more than doubling since mid-2021 to almost 7.4 percent, have jumped back to 6.75 percent, driven by a scorching January jobs report.

No bust, but a standoff between buyers and sellers

Instead of a price bust a la the one after the mid-2000s housing bubble, what’s developing is a standoff, says Logan Mohtashami, lead analyst for HousingWire in Irvine, Calif. On the one hand are buyers who would like homes to be as affordable as in 2019. But a big share of them either have to move or can afford to despite higher prices and rates. On the other are sellers, under no pressure to move since they have cheap mortgages and plenty of equity for now. So far, sellers are hanging tough in most cities. Even small increases in demand can keep prices firm, or move them higher, because inventory is so tight, Mohtashami said.


The recipe for 2023′s housing market is shaping up as prices that are roughly stable nationally, but with ongoing drops in some regional markets, interest rates that decline but not hugely, and buyers’ incomes that rise. Experts think they will combine to make affordability improve, maybe to near-normal historical levels, but still fall well short of where home buyers stood when mortgage rates were 3 percent or even lower.

“Households have two incomes, and you have to earn about $100,000 to buy a house,” Mohtashami said. “There are lots of dual-income couples that can do that. It gives you more buying power than people know about.”

No return of 2008, or 3% mortgage rate

The biggest reason why housing prices aren’t plunging like they did after 2008? Because the market isn’t being flooded with homes that drive down prices, as happened then.

Capital-rich banks aren’t under pressure as they were then, with foreclosure rates less than a tenth of those from the housing bust. Neither are households, with debt payment burdens near historic lows and few homeowners owing more on their mortgage than the house is worth. Serious delinquency rates, which skyrocketed after 2006 and led to 6 million foreclosures, have fallen by nearly half in the last year, to less than 0.7% of mortgages, according to Fannie Mae. Unemployment is the lowest in 54 years, letting homeowners either trade up or hang on to their current homes easily – and if they are among the 85 percent of owners whose mortgages carry interest rates below 5 percent, many will stay put rather than buy a more expensive house with a costlier loan.

All that means the supply of homes for sale is likely to stay tight, which limits price declines.


Affordability is bad now, after rate hikes and Covid-driven price increases, but it has been worse. And we’ve all been spoiled by recent history: After the financial crisis, housing affordability nationally literally doubled as interest rates collapsed and prices fell, reaching all-time highs. It had retained most of those gains up until the Covid price surge, even as home values recovered.