Market Analysis

The Sum of 3 Perspectives May Equal 1 Real Estate Reality

·       What will happen to housing prices?

·       What will the housing supply and demand situation look like in2023?

 In order to provide answers to these questions, we provide three different perspectives on the real estate market.

1.     Historical

2.     Expert

3.     Buyer and Seller Perspectives

 There are widely varying opinions on where the economy and home prices are headed. We have been and remain more sanguine, but provide a wide range of viewpoints below for your consideration. We will play spoiler and summarize the ideas below first and then provide the articles and links for reference.

 A quick summary:

·       Historical- History shows widespread and steep declines in home prices is by far the exception rather than the rule. In fact, if home prices are at all affected by the economy, the effect is usually short and mild.

·       Expert - Most of the experts below see little to know lasting declines in home prices. What most of the experts forecast is a vastly different market without the frenzy of2020-2022, fewer buyers, fewer listings, and longer listing times. In other words, most of them see a return to more historically normal markets.

·       Buyer and Seller Perspectives – the results of a broad survey performed by Zillow show that Buyers and Sellers are living in different realities. Probably a better way to state this is that a lot of buyers and sellers are notaccepting reality. It is most likely true that it is no longer the sellers’ market of 2020-2022, but it is also not a buyers’ market.


 1.     Historic

 The statement below from Corelogic and the chart below from the FED, both show that huge home price declines are a historic anomaly.

 “First, broad and deep troughs in housing prices is the exception, rather than the rule, during recessions. If we look at the past five recessions, we see that home prices typically weather down turns quite well. For example, home prices grew 6.6 percent during the Dot-Com recession in 2001. And during the 1980and 1981 recessions, prices grew by 6.1 percent and 3.5 percent, respectively. In fact, just two of the past five recessions brought decreases in home prices: a small 1.9 percent drop during the 1991 recession, and, of course, the massive19.7 percent price drop during the Great Recession.” – Corelogic.


2.    Economists and Experts

 The article below provides the views from several well-known real state analysts.

 ‘Flatlined’— or not? 5 economists and real estate pros on what will happen to the housing market next

Updated :Dec. 3, 2022 at 2:48 p.m. ET  By Alisa Wolfson Follow

 The housing market is in flux. Home prices nationwide increased year-over-year by11.4% in September 2022, according to CoreLogic. But on a month-over-month basis, home prices actually declined, dropping 0.5% from August to September of this year. What’s more, home-seller profits dropped in the third quarter as the housing market boom eased, notes real estate data company ATTOM. But what comes next? We asked real estate experts and economists what to expect from the housing market in December:

 Prediction1: Prices could come down in some markets.

Jeff Tucker, senior economist at Zillow, says he expects “that prices may drop a little by year’s end, based on the very soft demand we’ve seen in October and November.” And Jacob Channel, senior economist at LendingTree, notes that: “Prices are coming down in some markets.” (See the best mortgage rates you may get here.)

 Channel adds: “They may come down somewhat owning to diminished buyer demand from rates remaining relatively high as well as seasonality in the housing market —remember, the housing market is usually less active during the colder months of the year.” That said, it’s also likely prices could remain where they are this month, he adds.

 Prediction2: But major price drops are unlikely

“Home prices have pulled back in some markets, but rising interest rates have effectively canceled out any potential benefit to home buyers. Despite that, demand still far outpaces supply, so don’t expect to see major drops in home prices,” says Kate Wood, home expert at NerdWallet.

 Prediction3: Prices will plateau in most areas

“There’s been a softening of prices in what had previously been the hottest markets and prices in those select areas will see some pullback, but this will remain the exception rather than the rule. Most areas will see a plateauing of home prices and sellers won’t get the price they would’ve gotten in April or May, but they’ll still get a price that’s higher than year-ago levels,” says Greg McBride, chief financial analyst at Bankrate.

 Prediction4: Buyers should expect fewer listings

“National home prices have basically flatlined since June, as both supply and demand have been throttled by high mortgage rates. Affordability challenges have pushed many buyers out of the market, but current homeowners are also incentivized to hunker down, with the benefit of much lower monthly payments than they would owe on a new mortgage. I expect that prices may drop a little by year’s end, based on the very soft demand we’ve seen in October and November, but buyers should also expect fewer listings to choose from until the near year,” says Tucker. (See the best mortgage rates you may get here.)

 Prediction5: Annual price gains will ease

“Despite sellers reducing their asking prices as homes stay longer on the market, sales prices continue to remain higher than the previous year. Homes appreciate slower than in the previous months, but the lack of housing inventory is still leading to price gains. By year end, price gains will ease to 5%,” says Nadia Evangelou, senior economist and director of real estate research at the National Association of Realtors.

 Prediction6: The market is rebalancing

“For the first time in years, we’re seeing sustained inventory gains and the slowing of home price appreciation. But, given the lingering inventory challenges, prices are still up compared to 2021. A home’s value is becoming a much bigger part of the equation for buyers. Overall the market is rebalancing, ”says Nick Bailey, president and CEO of RE/MAX. (See the best mortgage rates you may get here.)

 Prediction7: Home purchase timelines could accelerate as a result of the better than expected inflation reading from mid-November

“Home prices will continue to dip seasonally as is typical for this time of year but they’ll still be up compared to a year ago. The mortgage rate drop that followed a better than expected inflation reading in mid-November could accelerate some home purchase timelines and reverse some of the recent slowing in home price growth as shoppers rush to capitalize on these lower rates unless sentiment shifts to expect lower mortgage rates ahead,” says Danielle Hale, chief economist at

 The advice, recommendations or rankings expressed in this article are those of MarketWatch Picks, and have not been reviewed or endorsed by our commercial partners.


3.   Buyers and Sellers – from a Zillow Survey

 The article below provides the results from a large Zillow survey.

 4 Housing Truths Buyers and Sellers Are Struggling to Face

 1. Buyers think prices will crash

Nearly half (46%) of agents surveyed noted that many buyers believe the market will crash and home prices will fall in a hurry. This hope is certainly understandable, especially if you've ever been a renter longing to buy a place of your own. If all you see are high prices on homes that are far outside the bounds of affordability, you'll likely wish for prices to fall so you can get on the property ladder sooner rather than later. Unfortunately, this is unlikely to happen.

TRUTH: Zillow's research suggests that prices will likely flatten over the next year, but not fall significantly. And there will probably not be a glut of homes on the market to help lower prices, either.

 2.Sellers think they'll get multiple offers

Zillow's survey found that 81% of agents were dealing with sellers who assumed they'd get multiple offers for their homes, as was the case during the salad days of the seller's market in 2020 and 2021. That was a great time to be a home seller, but the tide is starting to turn against them thanks to higher mortgage rates.

 More: Our picks for best FHA mortgage lenders

 TRUTH: Sellers must now put in the effort and spend the money to market their homes and ensure they're in the best possible shape to get a qualified and serious buyer. It's no longer enough to just hammer a "For Sale" sign into the front yard.

 3.Buyers think they should wait for lower rates

More than one-third (34%) of agents surveyed stated that buyers believe they should wait for lower mortgage rates before buying. There's logic here -- after all, no one wants to pay 6%, 7%, or more for a mortgage. You need only plug your costs into a mortgage calculator to see how a higher rate will impact your costs over the life of the loan.

 TRUTH: While it's not the best time to be a home buyer, you may find less competition from fellow buyers in this market, and can take the time to craft an offer that takes higher rates into consideration.

 4. Sellers think they can price their homes high

Finally, Zillow found that a majority (79%) of agents worked with sellers who believed pricing their homes high would result in correspondingly higher offers. And 74%have sellers who don't think they'll need to reduce their asking prices. Unfortunately, the market has changed, and Zillow notes that 28% of seller shave had to cut their listing price (the highest percentage since 2018).

 TRUTH: Sellers should price their homes fairly if they don't want them to just sit on the market -- 73% of the agents surveyed said that correct pricing is the most important seller strategy. Sellers should also be careful to avoid underpricing, as it could turn buyers off.

The HomeYap Team

Our team of experienced market and housing experts and researchers.