The real estate market is a constantly evolving landscape that is influenced by a variety of factors such as interest rates, economic conditions, and government policies.
Shrinking housing inventory can have a significant impact. When the number of available homes for sale decreases, it creates a competitive environment where buyers may have to bid higher prices or act quickly to secure a property. As a result, home prices may rise, making it more challenging for some buyers to enter the market.
The “months supply of inventory” is a metric used in real estate to measure the balance of supply and demand. It is calculated by dividing the number of homes for sale by the homes sold in a certain period, usually a month. A lower number indicates a seller’s market, where there is high demand and limited supply, driving up prices. A higher number indicates a buyer’s market, with more supply than demand, keeping prices stable or lowering them. Recently, although the market has slowed, supply and demand have remained proportionally equal, so there has been no significant change in inventory levels or market balance.
This prediction suggests that the real estate market in 2023 is expected to start with lower prices compared to the previous year, but higher than previous years. As new inventory becomes available, prices are expected to rise as the best listings will sell quickly with competing offers. In 2022 there were periods where two-thirds of sales were at or above asking price. The ratio is not expected to be that high this year but be aware that many of this year’s best move- in-ready homes will continue to sell quickly with multiple at-or-above list price offers.
In conclusion, the real estate market in 2023 is expected to be dynamic and impacted by various factors, such as the arrival of new inventory, competition among buyers, fluctuations in interest rates, and overall economic conditions. Despite the recent year-end decline in prices, expect prices to rise and reach a peak in June, before tapering off through the rest of the year. Above-average listings will sell for above average prices, and the best listings are likely to sell quickly due to increased competition. Overall, the 2023 market will bring shifts and fluctuations that buyers, sellers, and investors to stay on top of to make informed decisions.
‘23 Showings Off to Strong Start
January overall (all price ranges combined) showings are off to a respectable start across Michigan—
• down 11% compared to ‘22
• just slightly behind ‘21 and ahead of both pre-pandemic ‘19 and ‘20.
• Over-$750k showings are outpacing all but last year’s historic-high numbers.
2023 Predictions
What to Expect in 2023
• Prices will start about even with where they did a year ago and above all prior years.
• Prices will rise as fresh new inventory arrives. Buyer competition will cause the best listings to sell quickly and for higher than average prices, but the bidding wars won’t be as intense as they were through the first half of last year.
• Unless there is a significant change in the economy, sales and prices will peak in June (as they have the prior two years) and tail off through the balance of the year.
• Above average listings will continue to sell for above average prices throughout 2023.
