Today, in the Real Estate Newsletter: Question #10 for 2023: Will inventory increase further in 2023?
Brief excerpt: Earlier I posted some questions on my blog for next year: Ten Economic Questions for 2023. Some of these questions concern real estate (inventory, house prices, housing starts, new home sales), and I’ll post thoughts on those in the newsletter (others like GDP and employment will be on my blog).
I’m adding some thoughts, and maybe some predictions for each question.
10) Housing Inventory: Housing inventory decreased sharply during the pandemic to record lows in early 2022. Since then, inventory has increased, but is still well below pre-pandemic levels. Will inventory increase further in 2023?
First, a brief history. Here are a few times when watching existing home inventory helped my analysis.
Starting in January 2005, I was very bearish on housing, but I wasn’t sure when the market would turn. Speculative bubbles can go on and on. However, the increase in inventory in late 2005 (see red arrow on graph) helped me call the top for house prices in 2006.Several years later, in early 2012, when many people were still bearish on housing, the plunge in inventory in 2011 (blue arrow on graph below) helped me call the bottom for house prices in early 2012 (see The Housing Bottom is Here).
It seems likely that mortgage rates will remain well above the pandemic lows, and therefore new listings will be depressed again in 2023.
The bottom line is inventory will probably increase year-over-year in 2023. However, with the dearth of new listings, it still seems unlikely – but not impossible – that inventory will be back up to the 2017 – 2019 levels. Inventory is always something to watch!There is much more in the article. You can subscribe at https://calculatedrisk.substack.com/