By KIMBERLEY HAAS
Buyers waiting on the sidelines for home prices to drop may be out of luck this year.
During a webinar on Thursday afternoon, Mike Simonsen, founder and president of Altos Research, said that by now it has been clear enough for long enough that even the most strident of bubble-bursters recognizes that the housing market has held up well despite gloomy predictions walking into 2023.
Simonsen said the results have been surprising.
“Very few of us forecast what was going to happen, and forecasts are always tricky, but the key is that those of us watching the data right now, and those of us on this webinar right now, are those who have been able to pay attention to the data as it is happening and communicate it so that widely enough people understand what’s actually happened with housing supply and demand and prices this year,” Simonsen said.
Simonsen said a supply crisis is what’s keeping house prices high.
There are not enough sellers for the number of buyers out there, so home prices are remaining stubbornly unaffordable, he said.
And that may not get better anytime soon. Simonsen said they are seeing a long-term scenario of tight inventory.
Inventory last week was at 464,889, he said.
Simonsen said buyers have adjusted to the current mortgage rate environment and he expects 2023 will finish with fewer homes on the market than last year unless interest rates spike.
“There is a common misconception about ‘How do we get more inventory?’ And the misconception is that when mortgage rates will fall, that will allow more people flexibility to move, and we’ll see more inventory. But the data says that it actually takes higher mortgage rates to get greater inventory, to get more supply,” Simonsen said.
Simonsen explained that with low mortgage rates, holding costs for homes is cheap so people keep their first homes and rent them out as investment properties.
According to Altos Research, the median home price right now is $452,490 and the median price of new listings is $400,000.
Simonsen expects that there will be positive year-over-year price changes in 2023 and says prices will continue to go up in 2024.
“Right now it looks like we’re going to end the year flat to up a little bit, just a little bit. And because we’re going to end 2023 with less inventory than ’22, ’24 has positive signals for home price gains already baked into the data now,” Simonsen said.
Nadia Evangelou, senior economist and director of real estate research at the National Association of Realtors, told writer Erik J. Martin at Bankrate that she expects pricing to be relatively flat this year. She also does not expect prices to drop.
It is not expected that the inventory problem will be resolved this year, and though there was a slight increase in May, it is still 51% lower than pre-pandemic levels.
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