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The housing market will NOT crash in 2023, but a correction is expected for demand, inventory and buyers, while sellers face less cash for their homes, an expert warns.
- Housing market won’t crash by 2023, Las Vegas real estate broker insists
- But expert Craig Tann says sellers may need to get ‘real’ about house prices
- He adds that the ‘correction’ is reserved for demand, inventory, buyers and sellers.
- Mortgage applications increased nearly 28% in one week
The housing market won’t crash this year, but sellers may have to put more “realistic” price tags on their homes, a real estate expert has warned.
Las Vegas broker Craig Tann said a “correction” was coming in the real estate industry after two years of record low interest rates and soaring home prices.
It comes after a turbulent few months for homeowners, in which mortgage rates rose to a high of 7.2 percent in late October before falling back to just over 6 percent now.
Tann, owner of the Huntington & Ellis agency, believes the market is ripe for a necessary rebalancing between demand, inventory, buyers and sellers.
Las Vegas real estate broker Craig Tann says the housing market won’t crash in 2023, but the correction is reserved for demand, inventory, buyers and sellers.
A graph showing the change in US 30-year mortgage rates between September 2022 and January 2023
He told Dailymail.com: ‘Confusion has started to encroach on the real estate industry.
‘For those who have never experienced these conditions before, it creates uncertainty and many have raised questions about the future of the market; Is it cooling or crashing?
“We are seeing a balance of these extremes.
“The market is missing the necessary indicators of a crash and is instead showing signs of a correction.”
However, he added that homeowners may have a harder time selling their homes.
“Sellers looking to spark buyer interest may need to price their homes at a realistic and more attractive number than the previous market,” Tann said.
The housing market caught fire during the pandemic, as the rise in people working from home caused families to prioritize larger properties with more outdoor space.
Pictured: A couple of people being shown a property (file photo)
Savings accumulated during the lockdown and federal support schemes also boosted household income, helping more people to access property.
It quickly became a seller’s market while buyers faced stiff competition and eye-popping prices.
But a post-pandemic global economic downturn has had a ripple effect, sending interest rates soaring, though they are slowly starting to come down.
In the image: meeting on finance (file photo). The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) fell to 6.23% from 6.42%, with points decreasing to 0.67 from 0.73 (including origination fee) for loans with 20% down payment
The average rate for a 30-year fixed-rate mortgage with a conforming loan balance ($726,000 or less) is currently 6.23 percent.
Rates last year were typically below 4 percent.
But there was good news for homeowners today, as mortgage application volumes increased 28 percent last week, according to the Mortgage Bankers Association (MBA) seasonally adjusted index.
According to Tann, this is a natural result of prices starting to drop.
He said: “As prices have shifted to become significantly more attractive than last year, buyers may start to re-enter the market to take advantage of prices we haven’t seen for years.”
The market, however, is not seeing any increase in inventory.
The number of active listings is about 21% higher than it was a year ago, according to Redfin, a real estate brokerage.
That’s largely because homes are now staying on the market longer, with far fewer sales.
New home for sale listings are down 22% year-over-year.
It comes after other experts told Dailymail.com that some states would be better than others as the market rebalances.
Redfin chief economist Daryl Fairweather said cities like Austin, Phoenix and Las Vegas may see property prices fall, but homes in the Northeast and Chicago could gain in value.