The housing market has seen some significant transformations recently. Last year, the cost of mortgages skyrocketed, making it hard for people to purchase a home. Following years of rising prices, home values reached an apex last summer. These changes caused speculation that home prices would quickly collapse.

Despite the days of extreme buyer demand that drove prices up during the pandemic is over, national home values have stayed relatively flat. According to Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), this is unlikely to change:

“[H]ome prices will be steady in most parts of the country with a minor change in the national median home price.”

In today's market, sellers may be waiting for prices to go down to attract buyers, however, there is another factor limiting just how low prices will get - low inventory. This means that while some sellers may be hoping to lower prices to draw in buyers, there is a limit to how much they can do so.

“We simply don’t have enough inventory. Will some markets see a price decline? Yes. [But] with the supply not being there, the repeat of a 30 percent price decline is highly, highly unlikely.”

As you can see in the graph below, we’ve been at or near record-low inventory levels for a few years now.

That lack of available homes on the market is putting upward pressure on prices. Bankrate puts it like this:

“This ongoing lack of inventory explains why many buyers still have little choice but to bid up prices. And it also indicates that the supply-and-demand equation simply won’t allow a price crash in the near future.”

If more properties don't enter the market, a shortage of supply will keep prices from crashing, and inventory isn't expected to rise significantly this year, according to industry expert Rick Sharga:

“I believe that we’re likely to see low inventory continue to vex the housing market throughout 2023.”

Homeowners are currently in a comfortable position and do not feel the need to rush into selling their homes. The substantial equity they have acted as a barrier, protecting against any potential foreclosures or quick sales. Furthermore, they are able to take advantage of the low mortgage rates that are currently available and expect to remain in this situation for the foreseeable future.

Finding a reliable real estate agent has become more important than ever in the face of the current housing market conditions. A trustworthy professional with knowledge and experience of the local area can help navigate the fluctuating nature of the market.

Bottom Line

Many people predicted that prices would fall this year due to poor buyer demand, but that hasn't happened. Why? There aren't enough houses on the market. Let's talk if you're thinking about moving this spring.