2. Luxury and move-up buyers will continue to outperform the broader market
Most buyers—first timers in particular—remain rate sensitive. Higher-end buyers aren’t nearly as rate sensitive. The $1M+ segment has been growing notably and outperforming other segments. Some of the recent price gains can be attributed to fewer first-time buyers and more luxury and move-up transactions. These buyers often bring significant equity from prior homes.
Spring prediction: Expect continued strength at the upper end, supporting prices even if activity under ~$350K remains subdued. This dynamic will assist in keeping prices stable or rising modestly, despite the fact that sales are still below pre-pandemic levels.
3. Inventory will grow, but not enough to bring the market back into balance
Inventory has been trending upward for the last several years, with housing supply reaching the highest levels since 2020 in recent months, yet months’ supply remains firmly in sellers’ market territory. Affordability constraints and the “rate lock-in” effect are still limiting how many people are willing to make a move. That’s changing, however, as there are now more owners with mortgage rates above 6% than under 3% nationally.
Spring prediction: Buyers should see more choices. That said, they may still have to compromise on some wants while achieving their needs. But achieving a balanced market (5–6 months of supply) could be a stretch. Sellers should still hold the reigns with well-priced, well-staged listings in desirable areas, while mispriced listings will sit longer and require concessions.
4. “Economic anxiety”—not housing fundamentals—could be the biggest downside risk
Consumer sentiment remains quite low, yet retail spending has held up, so there’s a disconnect between what people say they’re feeling and what they’re doing. But it’s safe to say political and economic uncertainty levels are elevated. The labor market is undeniably slowing, and the economy faces multiple headwinds—most recently around inflationary energy price spikes. It remains to be seen whether more favorable inventory, rates, and prices/payments can overcome that dynamic.
Spring prediction: This creates a “push-pull” dynamic with lower rates attempting to push sales higher, but economic concerns pulling activity down. Sales flattening is more plausible than a downturn. If inflation re-accelerates or job growth continues to soften, buyer hesitation and weaker household finances could outweigh otherwise supportive conditions. If inflation remains tame, the economy returns to growth and rates continue to ease, expect continued but measured growth.
5. Prices will keep rising—but modestly and unevenly
Recent statewide prices are rising around 2.3% year-over-year, driven by product mix (more luxury activity, less first-time buyer activity) and equity rich move-up or downsizing buyers than by bidding wars. Homes are taking longer to sell; sellers are accepting slightly lower offers, and they’re also adjusting expectations. That said, the buyers and inventory that are out there should skew toward higher prices.
Spring prediction: Expect continued low-single-digit price growth, with stronger gains in the most desirable communities and in supply constrained submarkets. But expect flat or even softening prices in certain locations and market segments. Negotiations and market times may depend more on pricing strategy and local conditions rather than broader trends.
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