2023 Fall Market Dynamics: Affordability and Equity Hold the Key

Critical stats you need to know about the fall housing market.

Today, let's discuss the three key factors shaping the fall housing market of 2023. The first crucial factor is affordability. In the real estate market, affordability is determined by the proportion of one's income dedicated to housing payments. Historically, over the last 50 years, this figure has averaged 27%. However, in recent years, with extremely low interest rates of 3% to 4%, affordability reached its lowest point in 2020, with only 18% of income allocated to housing. Over the past 12 months, this figure has risen to 29%, primarily due to higher housing prices and interest rates. It's essential to monitor this metric as excessively high housing costs could impact home values. The second factor is the abundance of home equity. Currently, we're witnessing an unprecedented situation, with 39% of homeowners having no mortgage at all, and an additional 31% owing less than 50% of their home's value. This means that a staggering 70% of homeowners possess more than 50% equity in their homes, an unprecedented level. This abundance of equity is influencing the decision-making of those looking to move, as they leverage their cash to buy their next homes. Lastly, as the fall market unfolds, two notable trends are emerging. Firstly, there are fewer sales in the market compared to the previous year, resulting in a 15% to 25% decrease in home sales. However, this decline in sales doesn't necessarily translate to falling prices. Simultaneously, there's a reduced inventory entering the market, helping to balance supply and demand. While it remains to be seen what the next six to eight months hold, as we enter the fall housing market of 2023, prices appear to be holding steady. If you have questions about your local real estate market, school districts, or specific price points, please don't hesitate to call or email, and we'd be happy to discuss the local dynamics that matter to you.