The housing market is scaring off both buyers and sellers.Today's housing market is a toxic mix of high mortgage rates, high prices, tight supply and strangely strong pent-up demand — and it's scaring off buyers and sellers alike.
Then, as inflation surged, the Fed hiked rates. That, ironically, made the housing market even more expensive. Usually when rates go up, home prices go down.But this market is unlike historical ones because it also has a severe lack of supply. The Great Recession of 2008 and the ensuing foreclosure crisis hit homebuilders especially hard, causing them to underbuild for over a decade. They have still not made up the difference.Would-be sellers, meanwhile, are trapped.
The NAR is now lowering its 2023 sales forecast to a decline of as much as 20%, from a previous forecast of a 13% drop."Prices look to be flat from this point onwards at an 8% rate, despite the housing shortage," added Lawrence Yun, chief economist for the NAR. On the bright side of housing, apartment rents are finally cooling off, thanks to a record amount of new supply hitting the market. This gives renters less incentive to jump into buying. Demand for rentals, however, is rising.