Wondering what the market will do over the next six months? A recent forecast by Realtor.com predicts a drop in home prices even as inventory continues to dip. What does that mean for home buyers in this market? And what are sellers thinking?
“Conventional wisdom and the dynamic between supply and demand usually dictate that a drop in inventory is followed by an increase in prices, but this time that is not happening,” says Robert Elson of Coldwell Banker Warburg. “What we see now is a double whammy. The market is being squeezed from both ends; inventory is dropping, but so are prices.”
Elson says sellers feel locked into their low interest rates, but buyer’s costs are skyrocketing due to high interest rates and inflation.
We have some insight into how the forecast was compiled and what it could mean for your home search in the coming months, plus advice from experts on how to navigate this market.
Danielle Hale, chief economist at Realtor.com, says her team used to put together an annual forecast, but high volatility in the market in recent years necessitated a more frequent look at the whole picture. This mid-year forecast serves as a look at the second half of the year, and Hale estimates her team will release another forecast right after Thanksgiving.
“We use historical housing market and economic data to run our forecast model and make predictions,” she says, “so they’re based on what has happened recently in the housing market and economy, and we evaluate a bunch of different forecast models.”
From there, the data is weighed, with different weight placed on factors such as affordability and income growth vs. the growth of house prices, to set a forecast.
The midyear 2023 forecast shows that the number of
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