Will your market favor buyers or sellers this year? Yes, no or maybe
The Knock Buyer-Seller Market Index forecasts that many markets will shift to neutral or buyers market territory by late summer or early fall.
Key points:
- The transition could be challenging for agents and their clients, because the same market could look very different in spring vs. summer.
- Markets expected to have the biggest jump in homes for sale this year are sprinkled across the Midwest and the South.
- The index forecasts a decline in prices and sales in 2023, and an increase in days on market.
For agents trying to gauge whether they're in a buyers or sellers market in 2023, the answer might be a little bit of both — or neither.
The latest Buyer-Seller Market Index from fintech company Knock indicates that this will continue to be a transitional year, with quite a few metro areas shifting from a sellers market to a neutral one, or from a neutral market to a buyers market in the coming months.
"We expect 2023 to bring more balance to the housing market, which is certainly good news for buyers following three years of intense competition. At the same time, with inventory down nearly 42% from the start of the pandemic and no real incentive for sellers to move, finding a home you both like and can afford will remain a challenge," said Knock Co-Founder and CEO Sean Black.
For buyers and their agents, timing could be key in certain markets. For example, the index sees a big shift taking place in Bakersfield, California. A year ago the market strongly favored sellers; currently it is listed as neutral, meaning that neither buyers nor sellers have more leverage. Sometime in the next 12 months, it is expected to become a buyers market.
The report, which was released on Feb. 2, noted that similar transitions have already begun in some of the 100 largest markets. In January 2022, none of the markets in the index favored buyers. That total rose to 13 last month, while 43 were neutral and 44 still favored sellers.
As the market pivots, sellers might have one more window where they can flex some muscle, according to the index. Seasonal trends are expected to return in 2023, which means buyers could be back in force in the coming months. Inventory isn't likely to have recovered enough by spring, however, giving sellers an advantage. Once that peak is over, however, Knock predicts the march toward a buyers market will start in the summer.
In the report, Knock drilled down to figure out which areas could have the biggest increases in inventory, bringing about a buyers market sooner.
The 10 markets likely to see the biggest gains in for-sale homes in 2023 in rank order are: Salt Lake City, Dallas, Denver, Charlotte, Memphis, Las Vegas, Charleston, Colorado Springs, Colorado, St. Louis and New Orleans.
By late summer or early fall, buyer agents and their clients in those markets may have more leverage as inventory peaks in September, October and November.
"Those buyers with flexibility on where and when to move have an opportunity to find more homes for sale in some of the nation's largest and most desirable housing markets beginning in the fall," Black said.
Home prices are forecast to peak at $366,000 by June 2023, which is well below the record-breaking annual median sale price peak of $410,000 set in April, May and June 2022. By December, the median price is forecast to be $351,000, a 4% decline from $365,000 year-over-year.
Along with prices, home sales are expected to decline by 10.5% year over year, with the number of sales dropping in 75 markets, according to the index.
The report also predicts that median days on market will increase to 52 days by year-end — the highest number since January 2017. Raleigh, North Carolina, and Greeley, Colorado, are expected to lead the nation in days on market at 130 and 104 days, respectively.