Dear Friends,
I just reviewed a bank appraisal for a client’s $5 -million+ Westport home, and I was thrilled to see it had the “stable” box ticked next to its “market conditions” line item. Any lender or appraiser would all agree that right now – yes, we’re in a stable market.
And whether you’re buying, selling, or staying, stable should be music to your ears.
What’s coming next, you ask ? Where’s the 2023 puck gonna land you say ? Forbes Magazine’s latest “Housing Market Predictions for 2023” speaks of “a cooling rather than a crash.”
According to the report, real estate analytics group, ATTOM Data, we’re tracking for a 5% drop nationally, and “some markets, believe it or not, will probably see prices continue to increase.” (Westport, as well as many other Fairfield County towns – this could mean you! )
Below is a list of reasons why many experts predict a near term price decline that is at most, modest.
- Inventory is still low, low, low — under six months’ supply is considered low, and we’ve been experiencing 2 -3 months’ supply +/-.
- Homeowners (especially boomers) are STAYING PUT- since they’re paying the lowest mortgage rates humanly possible, AND enjoying substantially `increased equity, they just don’t wanna go ! (Check out the Westport chart above, as an example, but other towns look strikingly similar across the board.)
- Foreclosure rates are at half the normal levels, according to NAR, and even those struggling to pay their bills are not as likely to be ‘forced to sell’ their homes this market, because home equity is the highest it’s been in several decades ! This is directly in contrast to last time the market corrected, in the sub-prime era. Even when the COVID-19 moratorium was lifted, there wasn’t the flood of foreclosure applications predicted – the increase in home values and better regulation has allowed more owners to remain.)
- Single family new construction housing starts have continued to decline. Lower housing inventory began after the 2008 crash and hasn’t yet fully-recovered, according to HUD and the US Dept. of Housing, so we just aren’t expecting the glut of new homes that forced prices way down in the last downturn.
- Demand is still high. The plentitude of buyers (even those on a temporary holiday season-pause) is driven by demographics. Millennials and Genx-ers still want/need more homes, and now some feel renewed hope since rates came down from their Mid-November peak (even though higher rates mean lower purchasing power ! ).
In short, with transaction volume way down, though it may not feel like it, we’re still in a seller’s market, (see latest market stats by clicking graph below) and the most likely scenario ahead is a modest price correction from the double-digit percentage increases we’ve experienced each of the last two years, This correction adds to our market’s stability. And stable is as good as it gets !
Wishing the happiest, healthiest of holidays to you, with plenty of time to relax and enjoy (and hopefully gather once again).
Look forward to speaking to you in 2023 !
My best regards,
Joni