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Short Summary
Main recommendation: Don't buy a home in 2023, because the video argues home prices are likely to keep falling and buyers are gaining leverage over sellers. Instead, the speaker suggests waiting until conditions improve, and if you do buy, only purchase what you can afford with a fixed-rate mortgage you plan to keep for at least seven to ten years.
Key Points
- Four reasons cited for a challenging 2023 housing market: interest rates rising at their fastest pace in history, weaker consumer spending, rising layoffs, and more housing inventory.
- Redfin found the number of homes listed for sale rose 15% year over year, the largest increase on record, while the median sale price was up only 1.5% from a year earlier.
- Home sales fell 35%, the biggest decline on record, but the speaker says this reflects fewer buyers rather than sellers, with purchase applications down 36% year over year.
- Forecasts differ: the National Association of Realtors expects roughly flat values, realtor.com predicts a 5.4% increase, and Zillow expects moderate declines, with the largest drops in vacation destinations.
- Rents are expected to stay relatively stable or fall, since new apartment construction is at 40-year highs, with over 917,000 units underway, estimated for completion in the second half of 2023.
Details Worth Noting
- Concrete instructions: Only buy what you can afford with a fixed-rate mortgage that you intend to keep for at least seven to ten years, and do not buy based on predicting the market, since the speaker says forecasting is a shot in the dark.
- Concrete instructions: If you are looking to rent, the speaker suggests it is likely to be cheaper than a year ago, and that renters may have more leverage to choose where they live.
- Concrete instructions: If you are a current owner, the speaker notes that renting out a home instead of selling may be the next best option for sellers who won't give up a low-rate mortgage, so consider that path if you can't get your target price.
- The speaker says the median home price is about $454,000, compared with about $187,000 in the early-to-mid 2000s, while incomes have not kept pace.
- Milwaukee and Minneapolis saw some of the largest rent declines, while Oklahoma City saw the fastest 24-month rent growth; in most of the U.S., renting was still cheaper than buying across the 38 of the largest 50 metros.
- The speaker personally believes the housing market adjustment will take 12 to 18 months to fully show in prices, and personally believes a mild drop of roughly 10 to 15% in harder-hit areas is the most likely scenario, while stressing that forecasting is 'a shot in the dark.'
Bottom Line
Housing conditions in 2023 favor buyers, so the most practical path is to hold off on purchasing unless you can comfortably afford a fixed-rate mortgage you plan to keep long term. The video presents these forecasts as uncertain rather than guaranteed, and the speaker repeatedly notes that predicting the market is 'a shot in the dark.'
