Source: Realtor.com —
It’s that time of year again. Homebuyers begin poring over listings with Instagrammable kitchens and shoring up their finances. Sellers slap on fresh coats of paint and make all of the repairs they had been meaning to do since they moved into their properties. And a real estate agent somewhere pops a tray of cookie dough into the oven before opening the doors to the open house.
Welcome to the spring housing market, 2023—and buckle up for one unlike any you’ve encountered before. After a high-stakes, boom-and-bust cycle that played out over the past year, buyers and sellers alike are now waiting to see if America’s real estate market awakens from its deep slumber and starts galloping again into the prime selling season.
Will sellers plant those familiar “For Sale” signs in their yards again in large numbers, and will buyers snatch up their properties despite a crushing lack of affordability? The answers could reverberate through the market for years to come.
Buyers were frustrated, sellers felt trapped.
But then mortgage rates dipped to the low 6% range—and buyers jumped back in. Now, new listings are dwindling and rates are back up again, hitting 7.1% on Thursday afternoon before falling back down just below 7% on Friday for 30-year fixed-rate loans, according to Mortgage News Daily. That’s threatening what had been a promising prequel to the typically busy spring real estate market.
“The spring is likely to mark a turning point,” says Robert Dietz, chief economist of the National Association of Home Builders. “You’re at the low, but you can start to see better days ahead.”
How far ahead those better days are remains to be seen. The spring housing market is likely to be busier than the dead of winter, but real estate experts anticipate it will be slower than the wild frenzy the market experienced at the height of COVID-19 and in the more traditional, pre-pandemic years.
The number of homes for sale was up 67.8% year over year in February, according to Realtor.com® data. But buyers shouldn’t get too excited. Most of these homes have been sitting on the market for what might seem like an eternity, unable to attract buyers because they’re fixer-uppers, dated, overpriced, remotely located, or utterly lacking curb appeal.
Meanwhile, those unicorns in the housing market—the adorable, move-in ready homes in popular neighborhoods—continue to sell briskly, often for over the asking price.
“Desirable areas, good school districts, and good quality homes are still going to sell well and [still] face bidding wars,” says Ali Wolf, chief economist at the building consultancy Zonda. “But that’s not going to be the norm.”
So what will the norm in the housing market look like?
Buyers can expect a shortage of well-priced, turnkey homes—and plenty of competition for the few that go up for sale. Mortgage rates are anticipated to bounce around in the mid-6% to 7% range. And while home prices won’t shoot up again, even if they dip a little in certain markets, they are expected to remain well above pre-pandemic levels. That makes it even more expensive for buyers to buy.
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