In this video, I'll discuss forecasts of housing prices and construction in 2023 and beyond.
Housing prices over the past few years have been driven by inventory levels, and the fact that inventory has been at all-time lows resulted in all-time high housing price increases.
Obviously, the best way to increase inventory is to build, but while National Association of Home Builders builder sentiment rose to 35 up from 31 in January, the first rise in over a year, anything less than 50 is still considered negative sentiment. What this means is that areas that are experiencing population growth will remain inventory constrained because builders are not willing to risk overbuilding in the current market and existing home owners with locked-in low interest rates are less likely to make moves. While prices are expected to flatten and even soften, we shouldn't expect any drastic reductions, think less than 10% and likely closer to 5%. We know that builders have been cutting some pretty significant deals in developments, mostly to single family build to rent purchasers and offering incentives for the first time in years.
Conversely, in areas with flat or negative population growth, you should expect to see significant declines in pricing as inventory piles up with limited buyers in sight.
From the commercial market perspective, with building slowing on new multi and single family build for rent, in markets of population growth we should expect demand to remain strong, including in suburban locations where units are larger as families look for more space.
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