Is the Balance Shifting to Sellers in the 2023 Housing Market?
The U.S. housing market remains dynamic, influenced by a range of economic, demographic, and social factors. Recent years have seen rising interest rates exert a significant impact on the market, creating an environment that predominantly favors sellers. This situation is characterized by escalating home prices driven by limited inventory and intense competition among buyers. Conversely, a buyer’s market is characterized by declining prices due to an excess of inventory compared to the number of buyers. While there are signs that the current seller’s market may gradually shift towards a buyer’s market, the future remains uncertain.
Real estate and residential construction expert Jeff Kutas, CEO of MB Sentinel, believes that any transition to a buyer’s market will not occur in the immediate future. He points to high mortgage rates and the “lock-in effect” as significant factors. The lock-in effect arises when interest rates rise rapidly, discouraging homeowners with existing mortgages from seeking new mortgages with higher interest rates. As a result, they are inclined to stay put, reducing market inventory. Current data from the Federal Housing Finance Agency reveals that 85% of homeowners with mortgages have rates below 6%.
Kutas explains, “These homeowners, who might consider upsizing to create new inventory in the market, lack the financial incentive to do so in the current economy. This results in a significant gap between the prices that sellers desire and what buyers can afford. This may slow the market down, but it won’t necessarily create a buyer’s market.”
However, not all experts share the view that it will remain a seller’s market indefinitely. The U.S. housing market exhibits regional variations, and certain areas can diverge from national trends. In some regions, the transition to a buyer’s market has already begun, as noted by New York realtor Vickey Barron.
Priscilla Hammond of Desari Jabbar Realty Group also believes that a shift is possible, particularly if interest rates remain unchanged. She notes that many homeowners across the country have a substantial amount of equity in their homes, which may not significantly disadvantage sellers.
For homeowners considering selling their homes in the near future, the potential for a buyer’s market can be a source of concern. While the trajectory of the market is beyond an individual’s control, there are steps one can take to secure the best possible price in a buyer’s market.
Realtor Vickey Barron suggests that homeowners should make every effort to present their property in the best possible light. Decluttering, organizing, cleaning windows, and tidying closets can enhance a home’s appeal. Additionally, renovations and updates, even on a limited budget, can make a property more attractive to potential buyers.
Finally, finding an experienced real estate agent is crucial when listing a home. A knowledgeable agent can offer guidance on updates, marketing, pricing, and negotiation. If necessary, don’t hesitate to change agents if the current one is not the right fit.
The future direction of the housing market remains uncertain. To be prepared for potential shifts, stay informed about local, regional, and national market conditions. Flexibility and patience are key, as market conditions are constantly evolving and may become more favorable at any time.