East vs. West: Where sellers, buyers have the advantage in 2023
A new market forecast predicts the top 5 buyers markets this year will be west of the Mississippi, while the top 5 sellers markets will be in the east.
- Phoenix is expected to be the best market for buyers, and Fayetteville, NC, will be tops for sellers.
- Areas with the biggest early-pandemic price jumps will tend to have more inventory, giving buyers more leverage.
- More regions are expected to be in the buyers market category starting this summer.
The chances of finding yourself in a buyers or sellers market in 2023 could depend on which side of the Mississippi you're on.
The new Knock Buyer-Seller Market Index forecast showed a clear geographical divide, with the top five markets for buyers peppered across the Western and Southwestern U.S., and the top five sellers markets located along the East Coast, consistent with 2022 geographic trends.
"With home prices and interest rates cutting into purchasing power, the relocation hotspots where prices grew quickly during the pandemic will increasingly favor buyers in 2023, while more mid-sized markets offering good job opportunities and affordable housing will be the top performing real estate markets in 2023," said Knock co-founder and CEO Sean Black.
The top five buyers markets for 2023 all had home prices above the national median of around $374,000 in November, according to Knock. In rank order, they are:
1. Phoenix, AZ — $426,990 median home price
2. Colorado Springs, CO — $425,000
3. Las Vegas, NV — $386,000
4. Dallas, TX — $380,000
5. Denver, CO — $555,000
On the seller side, all but three of the 25 markets analyzed had home prices below the national median. The top five markets that favor sellers are:
1. Fayetteville, NC — $221,500 median home price
2. Harrisburg, PA — $237,000
3. Syracuse, NY — $195,000
4. Hartford, CT — $300,000
5. York, PA — $238,000
Market advantage will still vary, prices may remain high or rise
While the top five markets show clear geographic division, there are plenty of exceptions to the east-west trend. The Crestview, Florida metro area, for example, ranks seventh on the buyers market rankings, while Albuquerque, New Mexico ranks 17th on the sellers list.
Among those metro areas expected to be the best buyers markets, the report noted that while they may have more leverage, buyers will likely face prices that remain above pre-pandemic levels, as well as above national averages. For most of these markets, the prices will be lower than during the peak of June 2022, however.
Despite high prices, those shopping in buyers markets will have more options. Knock, a home finance technology company, predicts inventory will grow 54.4% on average in the top buyers' markets. Denver will see inventory grow by nearly 100%, according to the report.
Homes in the top forecasted sellers' markets tend to be metro areas that didn't see a big jump in prices early in the pandemic, keeping list prices below the national median. Many of these markets also have lower inventory. Knock predicts home prices will rise by between 5% and 18% over the next 12 months in these seller markets.
The rate factor
While not a part of the index measurements, mortgage rates will continue to impact what happens in these markets. Higher mortgage rates could mean a stronger buyers market, although those buyers will find it more difficult to close a deal.
"Higher rates put more strain on affordability, which reduces the number of buyers at every price point and gives the remaining buyers increasingly more leverage over sellers on price and other terms and could push markets towards buyers more/faster," Black said in an email.
Across the U.S., it will be an interesting transition to watch. According to the index, many markets will teeter in neutral territory over the next few months, with sellers gaining some momentum in the spring before switching more firmly to a buyers market by the summer.
The report expects 36 of the 100 largest metros will be buyers markets by November, up from 14 in November 2022. It predicts 41 will remain sellers markets (down from 46 in November 2022) and 23 will be neutral.
The company also expects the median sales price to peak in June at $386,000, dropping to $374,000 by November. If that happens, the November 2023 median sales price will be about the same as November 2022.