Don’t expect the high housing price bubble to burst in 2023

Don’t expect the high housing price bubble to burst in 2023

If you are a buyer hoping that the housing prices might take a dramatic dive in 2023, you are probably going to be out of luck. Today’s housing market conditions are fundamentally different from when the “bubble” burst in 2008, according to National Association of REALTORS® (NAR) Chief Economist Lawrence Young, and housing experts in Northeast Florida tend to agree.

“While there have been some talk suggesting a ‘bubble’ may burst in 2023, none of the indicators in Northeast Florida are pointing in that direction,” said Mark Rosener, president of the Northeast Florida Association of REALTORS®. “The median price in our region has remained stable, heading up or down 2-3% month to month for the past six months or so, and it appears that will remain the case throughout next year.  Sellers will need to turn for advice from a trusted REALTOR® and to be realistic in their pricing strategy. Meanwhile, buyers have some wiggle room to negotiate, again with the counsel of a REALTOR® who best understands the hyper-local marketplace during these extraordinary times,” he said.

“There is no indication of a widespread ‘bubble burst’ on the horizon,” Rosener continued. “Inventory is still restricted with new construction slowing down the pace of new builds.  Homeowners are reluctant to give up desirable low mortgage rates to list their homes unless there is a significant need to do so.  In short, demand has stabilized and inventory still somewhat restricted. All this points to a stable median sales price,” he said.

November’s market statistics seem to bear this out. According to the Northeast Florida Builders Association, 698 permits were issued across the region in November, and this is a significant reduction from the 1,132 that were issued in October.

Meanwhile, Northeast Florida’s median sales price for single-family homes weighed in at $376,385 in November, a marginal 2% decline from the previous month. Locally, the median price for Riverside, Avondale and Ortega shot up 15.4% to $525,000 in November, with the median days on the market at 51, a 20% increase since October and an active inventory of 103 homes, a mild 1.9% decrease since the previous month.

In the Murray Hill, Lakeshore, Hyde Grove, and Wesconnett neighborhoods, November’s median sales price for single-family residences was $250,000, virtually no change from the month before. Homes spent a median of 40 days on the market, a 25% jump from October.

In San Marco, San Jose, and Mandarin the median price of single-family homes was $376,385 in November, a 2% drop from October. Meanwhile, the median days on the market soared 18.4% to 45 days.

“After the frenzied nature of the real estate market throughout late 2020, all of 2021, and early 2022, the past six-month trendlines of all the major metrics in the Northeast Florida point to a more stabilized housing market in 2023,” Rosener said. “There is no question that the spike in mortgage rates throughout the spring and summer of 2022 along with other macro-economic factors, such as high inflation and severely limited housing inventory, resulted in decreased buyer demand in the last half of 2022. However, over the past several weeks the mortgage rate has come down from highs in the mid 7% range to the mid 6% range,” he said, “noting that economists project that mortgage rates may settle in the mid 5% range by the middle of 2023.  As mortgage rates stabilize so should buyer demand resulting is stabilized median price.”

As 2023 begins, buyer demand most likely will settle into a sustainable rate of home sales both in terms of closed and pending unit sales and this should continue into 2023 with normal seasonality fluctuation month to month, he continued, adding that he anticipates a normal uptick in sales activity in the spring and summer of 2023 with a pullback in fall and winter as is normal. 

 “In 2023, we expect that days on the market will continue to stretch to perhaps 45 days and months of supply to move into the four-month range,” he said.

“In general, 2023 should be reflective of more historical seasonality as it relates to the Northeast Florida real estate market.  This should be a welcome relief to both buyers and sellers as we settle into a more stabilized market.  Real estate is still local, in fact, hyper-local. The expertise of a NEFAR REALTOR® is the consumers best friend in navigating the process and market in 2023.”

By Marcia Hodgson
Communications Director
Northeast Florida Association of REALTORS®

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