(This article was originally published in NextMove, our weekly newsletter on the housing market. Sign up for it using the box below.)
I started listening to Christmas music on the first day of November. I appreciate the sense of seasons changing, the songs about spending time with your family, the brilliance that is Bruce Springsteen and the E Street Band playing “Santa Claus is Coming to Town.”
This is Jon Reed with NextAdvisor, and now that Christmas is over, it’s time to appreciate New Year’s music, which only gets a day or two, not two months. That’s fine, because there are only a few songs to work with. “Auld Lang Syne” is fine, I guess, but the one stuck in my head this time every year is “A Long December” by Counting Crows.
It’s probably because I’m an optimist at heart. I know, as Adam Duritz sings, there’s reason to believe maybe this year will be better than the last.
Compared to its two immediate predecessors, 2022 might not have felt too bad. But it still had more than its share of horrors: COVID didn’t go away, Russia invaded Ukraine, inflation hit levels not seen in 40 years, everyone started talking about recessions, houses suddenly got way more expensive … it was a lot.
For the housing market, will this coming year be better than the last? We’ve asked experts, and they’ve said it likely will be — although it’ll take time, and it won’t be perfect.
Here’s what might happen:
Mortgage rates should drop, says Derrick Nutall, vice president on Citi’s community lending team. “Right now, we’re estimating rates to come down in 2023, as well as the average cost of a home. All of that signals opportunity.”
The number of buyers and sellers will balance out — eventually, says Christine Cooper, chief economist at CoStar Group, a real estate analytics provider. “It’s going to take a little while for the housing market to reach a better balance of supply and demand.”
Home prices should continue to fall, says Odeta Kushi, deputy chief economist at First American Financial Corporation. “I do think we’ve seen the majority of the detrimental impact on purchasing power, based on falling prices.”
… but prices likely won’t crash, says Jamie Hopkins, managing partner of wealth solutions at Carson Group. “I don’t think there’s enough people who will be forced to sell in the next year that would drive prices down significantly. Home sales and inventory will slow down before we see a big drop in values.”
I’m always optimistic that next year can be better than last year. Let’s hope it’s true, this time.