Housing Market: Expert Cautions ‘There’s Very Little That’s Good’ Available Right Now
Written by
Vance Cariaga
Edited by
Renee Ross
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The U.S. housing market is expected to be a little easier to navigate for home buyers in 2023 than last year, as analysts predict a modest decline in prices due to an increase in the supply of available homes. Even so, the projected decline is less than previously thought because demand for homes has fallen only slightly.
In some markets, inventory remains so tight that buyers have few if any choices unless they are willing to pay premium prices. These markets include traditionally expensive cities such as New York, where demand continues to outpace supply.
“There’s very little that’s good [available in New York City],” Kimberly Jay, an associate broker at Compass, told New York magazine‘s Curbed website in a recent interview.
Most listings in Manhattan are either overpriced or have been sitting for months as sellers aim to get top dollar, according to brokers in the borough. Even though mortgage rates have risen sharply over the past year — something that typically leads to lower demand and prices — that hasn’t been the case in certain markets. You still find bidding wars in large metro areas like New York, San Francisco and Boston.
But the problem isn’t confined to big cities. As Time noted in an article last month, housing inventory across the country has been falling since the rebound from the Great Recession. This is partly because real estate investors have been buying up homes and either renting them out or holding them until their prices shoot higher.
“Institutional investors are…making this market more difficult,” Peter Chabris, a real estate agent in Cincinnati, told Time. “[Buying a home is] stressful, it’s highly competitive, and it’s emotionally challenging.”
Investors aren’t the only cause of low inventory. Another factor is that more older Americans have decided to stay put instead of selling their homes and moving elsewhere. Meanwhile, homeowners who were lucky enough to lock in rock-bottom mortgage rates in 2020 and 2021 are now reluctant to sell their homes because of today’s much higher rates.
In markets where there hasn’t been a lot of new construction, such as Hartford, Connecticut and Buffalo, New York, inventory is near historic lows.
“I don’t think I’ve ever seen it this bad,” Becky Koladis, a real estate agent in Hartford for 23 years, told Time. “There’s just not a lot to choose from.”
In December 2022, Hartford had only 1.4 months of housing supply, according to Redfin. That is down from 5.9 months less than four years earlier. In the past, economists would say that a balanced housing market has between four and six months of supply.
“But we haven’t seen that since the bottom of the last housing market,” Daryl Fairweather, Redfin’s chief economist, told Time.
The result is that you see very tight inventory in markets you might not normally associate with high housing demand.
A January report from Redfin found that of the 100 most-populated metro areas in the United States, those with the lowest inventory were Rochester, New York (1.2 months’ supply); Buffalo (1.4 months); and Allentown, Pennsylvania (1.5 months). Others on the list were Grand Rapids, Michigan; Worcester, Massachusetts; Greensboro, North Carolina.; Hartford; Boston; and Montgomery County, Pennsylvania.
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