What to Expect in the Market This Fall
The fall real estate market is typically a slower time of year than the spring, but that doesn’t mean it’s not a good time to buy or sell a home. In fact, there are a number of factors that could make the fall market even more attractive than usual this year.
What Do the Experts Have to Say?
Experts are predicting that the fall market will be strong. For example, Lawrence Yun, chief economist at the National Association of Realtors (NAR), said in a recent interview that he expects home sales to increase by 8% in the fourth quarter of 2023. He also said that he expects prices to continue to appreciate, but at a slower pace than in recent months.
“We expect home sales to increase by 8% in the fourth quarter of 2023, as rising mortgage rates and higher inflation begin to slow home price growth and moderate demand.” – Lawrence Yun, chief economist at the National Association of Realtors
“The fall market is shaping up to be competitive, but there will be more opportunities for buyers than in recent months. Buyers who are willing to be flexible with their budget and their timeline will be in the best position to find a home.” – Danielle Hale, chief economist at Realtor.com
Inventory Remains at Its Lowest Since 1984
One of the biggest challenges in the current housing market is low inventory. This means that there are fewer homes on the market than there are buyers, which is driving up prices. However, inventory is expected to start to increase in the fall, which could help to slow the pace of price appreciation.
Housing inventory in the United States is at all-time lows. According to the National Association of Realtors (NAR), the number of homes for sale in the US fell to 860,000 in January 2022, which is the lowest level since NAR began tracking housing inventory in 1982. This represents a 61.8% decrease from January 2021.
The low housing inventory is due to several factors, including:
- The COVID-19 pandemic: The pandemic caused homeowners to delay selling their homes, as they were hesitant to move during a time of uncertainty.
- Record low mortgage rates: Low mortgage rates made it more affordable for buyers to purchase homes, which increased demand and further depleted inventory.
- Lack of new construction: The construction industry has struggled to keep up with demand, due to labor shortages and supply chain disruptions.
The low housing inventory is having negative impacts on the housing market such as:
- Higher home prices: With fewer homes available for sale, buyers are competing for a limited number of properties, which is driving up prices.
- Faster home sales: The low inventory is also leading to faster home sales. In January 2022, the median time it took to sell a home was just 17 days, which is the fastest pace in over a decade.
- Fewer options for buyers: With fewer homes available for sale, buyers have fewer options to choose from. This can make it difficult to find a home that meets their needs and budget.
It is unclear when the housing inventory will return to normal levels. However, some experts believe that it could take several years for the market to balance out.
Where Will Mortgage Rates Go?
Mortgage rates are expected to remain high in 2023, but there is some disagreement among experts about how high they will go.
- Fannie Mae: Fannie Mae predicts that the average 30-year fixed-rate mortgage will reach 6.8% in the third quarter of 2023, before falling to 6.6% by the end of the year.
- Freddie Mac: Freddie Mac predicts that the average 30-year fixed-rate mortgage will reach 6.4% in the third quarter of 2023, before falling to 6.1% by the end of the year.
- Mortgage Bankers Association: The Mortgage Bankers Association predicts that the average 30-year fixed-rate mortgage will reach 6.7% in the third quarter of 2023, before falling to 5.9% by the end of the year.
It is important to note that these are just predictions, and the actual outcome could be different. The mortgage market is volatile, and it is difficult to predict how it will behave in the future.
Demand Will Remain Strong
Demand for home purchases is expected to remain strong in 2023, but it is likely to cool off from the record-breaking levels seen in 2022.
There are several factors that are driving demand for home purchases in 2023:
- The ongoing pandemic: The pandemic has caused people to rethink their living situations, and many are now looking to buy a home with more space.
- Low unemployment: The unemployment rate is currently at a record low, which is giving people more financial security and making them more likely to buy a home.
- Rising rent prices: Rent prices are rising rapidly in many parts of the country, which is making it more affordable to buy a home instead of rent.
- Millennials: Millennials are now the largest generation in the United States, and they are starting to buy homes in record numbers.
Millennial and Gen Z Buyers are Driving That Demand
The millennial and Gen Z home buying market is significant. In 2022, millennials accounted for 37% of all homebuyers, while Gen Z accounted for 10%. This means that millennials and Gen Z combined made up 47% of all homebuyers in 2022.
The millennial and Gen Z home buying market is expected to continue to grow in the coming years due to:
- The size of these generations: Millennials and Gen Z are the two largest generations in the United States. This means that there are a lot of people in these generations who are reaching the age where they are looking to buy a home.
- The increasing cost of rent: Rent prices are rising rapidly in many parts of the country. This is making it more affordable to buy a home instead of rent.
- The desire for more space: Millennials and Gen Z are more likely to want to live in homes with more space than previous generations. This is due to a number of factors, including the fact that they are more likely to have children and pets.
It’s not a stretch to say that the millennial and Gen Z home buying market is a significant force in the housing market. These generations are driving demand for homes, and they are expected to continue to do so in the coming years.
Here are some additional data points about the millennial and Gen Z home buying market:
- In 2022, the median home price for millennials was $300,000, while the median home price for Gen Z was $250,000.
- Millennials are more likely to buy homes in urban areas, while Gen Z is more likely to buy homes in suburban areas.
- Millennials are more likely to be first-time homebuyers, while Gen Z is more likely to be repeat homebuyers.
- Millennials are more likely to use a mortgage to finance their home purchase, while Gen Z is more likely to use cash.
The millennial and Gen Z home buying market is a diverse market with a wide range of needs and preferences. It is important for real estate professionals to understand the needs of these generations to be successful in this market.
Valuable Tips for Both Buyers and Sellers
If you’re planning to buy or sell a home this fall, here are a few tips:
- Be prepared to act quickly. The fall market is expected to be competitive, so you’ll need to be prepared to make an offer as soon as you find a home that you like.
- Be flexible with your budget and your timeline. If you’re willing to be flexible, you’ll be more likely to find a home that meets your needs.
- Do your research. Before you start looking at homes, it’s important to do your research and understand the market conditions in your area. This will help you to make informed decisions about when to buy or sell a home.
- Get pre-approved for a mortgage. Getting pre-approved for a mortgage will show sellers that you’re serious about buying a home and that you have the financing in place.
- Work with a qualified real estate agent. A good real estate agent can help you to find the perfect home and negotiate the best possible price.
The fall real estate market is expected to be a good time to buy or sell a home. If you’re considering a move, now is a good time to start planning. And that means getting in touch with your local Embrace Home Loan® office. We’re here ready to get you into your dream home this fall, and we promise no leaf will go unturned as we find your dream loan!