Tim Rood Discusses 2023 Housing Market Outlook on Yahoo
The fate of the residential housing market in 2023 will continue to be driven largely by interest rates, with significant impact on both inventory and transactions. Tim Rood, SitusAMC Head of Industry Relations, recently spoke with Yahoo!Finance about how these factors will play out in the housing market.
“It’s really up to really Jerome Powell and how he is feeling,” Rood said, referring to the Federal Reserve Chairman, “because he's gambling with at least 60% of the population’s capital right now.”
Rising rates have already put a significant dent in the market, with mortgage originations down about 40% and 35% fewer homes under contract now versus this time last year. Rood laid out two potential scenarios: mortgage interest rates rise to around 7%, which would lead to rising inventories homes become less affordable and potential bidders evaporate. “That's when things really start to break down,” he said.
Alternately, rates could sink back around 5%, accelerating the volume of sales. “If that were to happen, then you're going to have far lower inventory, and property values are going to be much stickier, particularly in the East, and probably go up in 2023,” he predicted.
Meanwhile, it’s important to note that the housing market is coming off tremendous highs seen in early last year, Rood said. “We often forget that 2022 came in like a lion -- we were crushing it on every level, in terms of existing home sales, record-low interest rates, originations, home appreciation,” he said. “So (the market) is off a trend that was incredibly high. While figures are down, we are still going to end (2022) fairly strong in that you still had home price appreciation in both the existing and new home categories.”