Blogs

Will the housing market crash? 

This is the anxiety-inducing headline that seems to be flooding our news feeds lately. While severe words associated with the housing market, like ‘crash,’ ‘recession,’ and ‘downfall,’ may help websites reach their click rate quotas, most economists and housing experts agree we won’t see a sweeping nationwide housing crash in 2023.

But even if most markets can expect to avoid significant price declines this year, the key question for real estate professionals remains: What can I expect from the housing market—both locally and nationally—in 2023? And perhaps most importantly: How will it impact my bottom line?  

Not even the greatest economic minds can offer absolute certainty, but NAR’s Chief Economist and supervisor of the NAR Research Group, Dr. Lawrence Yun, can get closer than most to accurately forecasting the future of the U.S. economy and real estate market.  

The Year Ahead in the United States: Recapping NAR's Real Estate Forecast Summit
In December 2022, NAR hosted its annual Real Estate Forecast Summit webinar, led by Dr. Lawrence Yun. The webinar also featured a panel discussion between real estate industry experts, researchers, and economists. The summit served, in part, to take stock of national housing market data at the close of last year, and ultimately to predict and discuss what was in store for 2023. 

It was clear from Dr. Yun’s lecture and the subsequent panel discussion that what’s happening on the national level is far more nuanced and regionally varied than the click-hungry headlines might portray. Dr. Yun opened his lecture by noting that despite the chatter of a housing crash, median home price is on an upward trajectory in the U.S.; an upswing that began around the turn of the 21st century and keeps climbing, according to Dr. Yun’s report from the NAR Research Group. Over time, real estate ownership remains a low-risk, high-reward opportunity for buyers and sellers in both commercial and residential markets.  

2023 may start slower than we’d like, but agents must be ready when the market inevitably picks up speed, which will likely happen this spring in Minnesota—even if it’s down from the red-hot closed sales we saw in the spring of 2022. “The housing market is a cyclical business,” Dr. Yun said. “Buyers might be retreating right now, but if mortgage rates continue to come down, [buyers] will return.” Yun projects that mortgage rates will indeed come to rest at a more reasonable figure of 5.5% by the end of 2023 if inflation continues to drop—down significantly from the steep peak of over 7% we saw in late 2022. 

But with mortgage rates remaining relatively high and more sellers staying put to start the year, the lack of housing inventory will be one of the primary challenges faced by most markets in the country. Job growth trends could also generate fresh housing demand. Overall, low inventory could keep prices up, according to Realtor.com Chief Economist Danielle Hale. She commented, “Home sales may pull back for a time, but will grow when mortgage rates stabilize.” Panelist Danushka Nanayakkara-Skillington, assistant vice president of forecasting and analysis at the National Association of Home Builders, agreed. “Even if prices come down a bit [in some markets], we’ll still be ahead of where we were before the pandemic boom.”  

The Year Ahead in Minnesota: MNR’s 2023 Economic Outlook with Lawrence Yun
MNR is excited to host a 2023 real estate and economic outlook webinar with Lawrence Yun on Thursday, January 19, from 10–10:30 am. Dr. Yun will cover the local and national real estate forecast, the evolving economic backdrop, and explain today’s market as compared to past housing cycles. You don’t want to miss this free opportunity to hear one of the country’s leading economic and real estate experts give an exclusive forecast for the Minnesota housing market!

Please note: There is no CE offered for this webinar. To register for the event, click here.

View Dr. Yun’s presentation slides from the NAR Real Estate Forecast Summit here.