Why Home Prices Are Holding Steady—

The housing market has been experiencing significant changes in recent times, with a rise in mortgage rates affecting the ability of many people to purchase a home. In addition, after years of rapid price appreciation, home prices finally peaked last summer. As a result, headlines predicted that prices would crash.

Despite the frenzied buyer activity that drove up home values during the pandemic, prices have remained relatively flat at the national level. According to Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), this trend is expected to continue:

“Home prices will be steady in most parts of the country with a minor change in the national median home price.”

Many people believed that sellers would have to lower prices to attract buyers in the current market, but another factor has come into play – low inventory. This limitation is affecting just how low prices will go. According to Yun:

“We simply don’t have enough inventory. Will some markets see a price decline? Yes. But with the supply not being there, the repeat of a 30 percent price decline is highly, highly unlikely.”

We have been experiencing record-low inventory levels for a few years, which is putting upward pressure on prices. This lack of available homes on the market is causing many buyers to bid up prices. Therefore, the supply-and-demand equation won’t allow a price crash in the near future.

Inventory isn’t likely to increase significantly this year, according to industry experts, which means that low inventory will continue to vex the housing market throughout 2023.

Since sellers have plenty of equity right now, they are under no pressure to move. This equity acts as a cushion for homeowners, lowering the chances of distressed sales like foreclosures and short sales. Additionally, many homeowners are locked into low mortgage rates, so that equity cushion isn’t going anywhere soon.

In conclusion, it’s important to partner with a trusted real estate agent who understands the local area and can navigate the current market volatility. If you’re thinking about moving this year, be sure to work with an experienced real estate agent who can help you navigate the current market trends.