Predictions & Trends for 2023

Today’s data from the National Association of Realtors is a story of inches. There are no wild slides, plunges, or skyrockets. The real estate housing market numbers, month over month, reflect incremental increases in inventory and median price, which have resulted in an incremental decrease in sales activity. 

My takeaway? It’s just not a good market for buyers. It’s not that great for sellers, either, since there are so few buyers. But hey, at least it’s interesting for academic economists. 

But when you look at these July 2023 housing market numbers in a broader context of year-over-year data, you can see the true impact of high interest rates and low inventory. Existing sales slipped 2.2% from last month, but sales are down 16.6% from this time last year. 

It’s a bitter cocktail of numbers to be sure—but it’s not all doom. Read on to see how the winds appear to be blowing and where real estate agents and brokers can capitalize on this—I’ll say it—really weird and frustrating housing market. 

What Does NAR’s Lawrence Yun Say?

July 2023 Data: Is the Housing Market Crashing? 

Depending on where you get your news, the market is either on the brink of crashing; crashing next week, next quarter, or at 2 p.m. today; or it’s already crashed and you’re too busy on TikTok to notice. However, these reports of our real estate market’s pending death, I think, are greatly exaggerated. 

It’s a weird time for sure, and it’s an especially frustrating period for our buyers. There just aren’t many houses at the lower price points out there for sale. Oh, and interest rates are the highest they’ve been since Billy Bob Thorton and Angelina Jolie divorced 20 years ago.

The doom and gloom comes when we look at housing data year over year. The sky-is-falling perspective is easy to understand when someone sees that existing home sales have tanked 16.6% in one year and inventory’s plummeted 14.6% since last summer. 

Regionally it’s mixed, with some hope out West where sales rose. Everywhere else, by which I mean the other 39 states, sales as a whole are down.

But our current market is a correction, not an implosion. As our friend Dr. Yun says, most homeowners are seeing increased value in their homes. It’s buyers we’re worried about. With everyone watching to see if rates crescendo over 8%, homes—all homes—are expensive for borrowers.

Summer 2023 Housing Trends

It’s hot and sweaty out there. 

Median Price

Prices are increasing everywhere except out West, where they remain steady at $610,500 (and, interestingly, it’s the only geographic region where sales were up! Maybe those Westerners are on to something).

• In the Northeast, prices rose 5.5% from this time last summer to a median price of $467,500. 
• Midwesterners also raised their prices 3.9% from July 2022 to $304,600.
• In the South, prices increased slightly, hitting $366,200 with a 1.7% increase from last year.

Nationwide, the median price rose almost two percent to $406,700. This is reminiscent of an early spring 2022 price when we reached the median home highest price ever: $413,800. There have only been three other times when the national median price has peaked above $400,000: May 2022, June 2022, and June 2023.

And, of course, prices have increased dramatically (by more than 33% or $100,000-plus) over the past three years. 

Our poor buyers. 

Housing Inventory 

Housing inventory is slowly ticking up, because of course. Between rising prices and higher borrowing rates, everything is expensive so buyers are thinking twice about purchasing. This is what any of us Realtors will tell someone we’ve trapped in a corner at a cocktail party or neighborhood BBQ: All other things equal, as mortgage rates rise, so will inventory. As rates fall, so will inventory. Boom. Economics. 

But again, the month-over-month inventory numbers are inching up, so we’re now at 3.3 month supply. For comparison, it was 3.1 in June. That’s great. But it’s still half of what we consider normal—a cushy six-month supply. We haven’t had that in a very long time. 

What to Share with Your Clients

Buyers don’t need reminding that rates are higher than they’ve been since The DaVinci Code was published or Pirates of the Caribbean was released (and I’m talking about the first one). They know that. They are seeing their buying power further crushed with every announcement from the Fed. 

But there is, actually, some really promising news in this NAR housing data release. Buyers are actually showing a lot of confidence in the market, and that, my friends, is thanks to you: their real estate agents. Take, for example, the fact that first-time homebuyers made up 30% of sales in July. That’s higher than last month (27%) and it’s higher than this time last year. 

? That means Realtors are finding ways to help clients buy their first homes, even with these frustrating market forces at play. ?

What Sellers Want (or Need?) to Hear

The good news? Sellers, you have near record-setting home values. Good job investing. Even Yun agrees: “At least in terms of prices, it looks like the housing recession is already over.”

But, if you slowly increase the price of a product, it will probably stay on the market longer. NAR’s housing data release today showed that the average number of days on market increased to 20, up from 14 last year. Buyers don’t have the borrowing power they had two years ago, so they’re not buying houses, which means houses are staying on the market longer, which increases inventory, and round and round we go. 

If a seller needs to sell quickly, there are plenty of buyers out there who aren’t even looking for a deal or for a discount—they just want a home they can afford. The lesson for sellers? To move a home, price it accordingly. Want top dollar? You might still get it, but it will take more time.

What Buyers Want—and Desperately Need—to Hear

It’s going to be OK. Rates are high and they might even get a little higher this fall. But everyone is in the same boat. People still need to move, downsize, upsize—there will always be reasons to buy and sell. Inventory is creeping up, which means there is more opportunity coming onto the housing market. 

Patience, creativity, and the knowledge that refinancing is a possibility in the near-ish future should be a recipe for hope. Even when these numbers are…frustrating. 

Looking Ahead: Predicting the Fall 2023 Market

Some armchair economists will always opine that a market is on the brink of crashing. And I readily admit that these numbers aren’t trending in a way that makes things easy for agents. But,1,221,000 first-time homebuyers purchased a property in July 2023. That’s really good news. 

Rates might increase again this fall as the Fed continues its epic battle against inflation, but there is a lot of hope—they’re making progress and inflation is decreasing. Life continues and people still need to buy and sell real estate. We’ll be there for them when they do.

Next month, new NAR existing housing data will be right here! Bookmark this page, pour yourself a cup of coffee (or a shot of vodka; we don’t judge) and get our quick and dirty take on the August numbers. 

And In Other News… 

What else are we talking about while at The Close watercooler? (Or on in the #watercooler Slack channel?)

Keeping the Lawyers Busy

The housing data isn’t the only thing we’re chatting about here at The Close. We’ve also been tracking the myriad interesting (potentially universe-altering) antitrust cases making their way through the courts. We were interested to learn that Judge Thomas Zilly of the U.S. District Court for the Western District of Washington dismissed the allegations filed against Zillow and NAR by REX Real Estate. 

Zilly found no evidence of anticompetitive agreements between Zillow and NAR. Furthermore, Zilly ruled that Zillow, in particular, took steps to continue to display REX listings, even when other brokerages (looking at you, Redfin) did not. NAR was found to have an optional “no-commingling rule” that in no way punished the 29% of Realtor-affiliated MLSs that did not adhere to it. But Zillow is still on the hook for other REX allegations that Zilly is currently weighing. 

NAR can take a deep breath now that these particular legal woes are behind them, after a messy two years of suing and counter-suing with REX. However, that massive class-action lawsuit filed against NAR is moving forward. And, as you know, it has the potential to change the face of our industry forever. Stay tuned…

A Listing Fit for a Princess 

Have a hard-to-please buyer who isn’t bothered by rising interest rates or satisfied with any properties you show? We’ve got the perfect French villa for them. It’s so beautiful, in fact, that Grace Kelly, dazzling American film star and princess of Monaco, loved to vacation here. Les Moulins du Villars à Gilette is perched high on a hill in a small town between Nice and Monaco. Listed with Sotheby’s for €11.5 million (about $12.5 million), this 14th-century former flour mill includes seven bedrooms, two kitchens, an historic water wheel encased in glass, and, of course, the all-important wine cellar. Yes, please. 

Bringing It All Together

Data tells a story, and this month’s housing data tells one of slowly creeping numbers that reflect a lot of frustration for buyers. Sellers are doing OK, but the more they raise their prices, the more time their properties will sit on the market. 

All in all, there is hope. We’ve seen weird and wild times before. Come back next month to learn what the new NAR housing market numbers say and what it means for us and our clients. In the meantime, zip on over to that villa in France and let me know how many bottles fit in the wine cellar.