Recent changes in market conditions, including
Homes that are priced properly will have a number of buyers although not the hoards that inundated the market throughout 2021 and into the start of 2022.
"Affordability will still be a challenge for many buyers this year, but sellers who price and market their home competitively shouldn't have a problem finding a buyer," said Jeff Tucker, Zillow senior economist, in a press release. "The slight drop in mortgage costs since October should revive demand after last fall's slump, especially in more affordable markets and neighborhoods, but we are unlikely to see competition approach the fever pitch seen in the last two years."
A homebuyer today that put 20% down would be spending 31% of their income on the principal and interest portion of their monthly mortgage payment, or $1,595, based on Zillow's calculations.
Back in October, when rates were still on the rise and
While the shortage of homes for sale plaguing the market for the past several years remains, the demand side has cooled — to a point.
The traditional reasons for home purchases – life events like new jobs, marriage and kids – will drive the market, a change from the low interest rates over the past several years.
However, rising inflation, growing unemployment and
"The economic news from earlier this winter raised hopes for a soft landing of the economy and housing market, but the risk of renewed inflation or even a recession is still significant, and either would have a serious impact on the housing market," Tucker said.
January's housing starts came in
But that might be helpful to the housing market's shortage.
"Builders will likely continue to focus on completing existing projects, rather than starting new ones," Kushi said. "As new completed home inventory rises, it will provide some much-needed relief to a supply starved market."
Kushi noted that mortgage rates increased in the past couple of weeks as investors are concerned the Federal Reserve will keep in place its restrictive economic policy longer than previously thought as inflation remains persistent.
"Even so, builders are hoping that we're past the mortgage rate peak and can look for some mortgage rate stability in the months to come," Kushi said.