- Recent reports point to a more ‘buyer-friendly’ housing market.
- Inventory growth has cooled the market, giving buyers a breather.
- Home buyers now have more bargaining power, as well.
- Sellers appear more willing to accept contract contingencies these days.
- As a result, late 2022 and 2023 could be a good time to buy a house.
For the past two years, we’ve heard story after story about how hard it is to buy a home in the U.S.
Buyers have struggled with a high-paced real estate market, tight supply conditions, and fast-rising prices. They’ve had to compete fiercely with one another, often in bidding-war scenarios. Some had to waive their contract contingencies or offer more than the asking price.
But now, the real estate market is starting to shift in a way that favors buyers for a change. As a result of these ongoing changes, late 2022 and 2023 could be a very good time to buy a house.
A Housing Market Shift Is Underway
Fierce competition, tight supply conditions, and zero negotiating ability.
These were the conditions home buyers have had to deal with since the second half of 2020. The COVID pandemic sent the housing market into overdrive, depleting supply and boosting prices like never before. And many home buyers found themselves on the losing side of it.
Now, as of late summer 2022, things appear to be changing. Significantly.
In fact, a recent report showed that buyers across the U.S. are now enjoying more bargaining power in the real estate market. It also showed that sellers are more likely to accept contract contingencies from buyers, when screening offers.
In late August 2022, researchers from Realtor.com published the results of an online survey in which hundreds of home sellers provided feedback. Their report showed that the market is starting to favor buyers more than it did a year ago. That alone could make it a good time to buy a home.
To quote the report:
“The days of frenzied sales with waived inspections might be behind us, as buyers regain a bit of bargaining power. According to a new Realtor.com® survey, 92% of people who sold their home within the last year accepted some buyer-friendly terms and 41% accepted some contingencies in the contract.”
That 41% statistic indicates changing conditions within the real estate market. Over the past couple of years (and especially during 2021), many home buyers in the U.S. had to waive their contract contingencies just to get their offers accepted. So clearly, a change is in the air.
Late 2022 and 2023: A Good Time to Buy a House?
These trends show that the fall and winter of 2022 could be a very good time to buy a home in the U.S. In addition to having more negotiating leverage, buyers could also have more properties to choose from. That’s because inventory levels have risen over the past year, a trend that could continue into 2023.
According to a separate Realtor.com report, published on September 1st:
“These trends reflect a housing market that is getting a refresh from the past two-plus years of frenzied buyer demand that outmatched supply, with inventory rising and more typical seasonality expected to return in the fall.”
Nationwide, the total number of active real estate listings rose by nearly 27% in August, compared to a year earlier. Some housing markets — like Austin, Nashville and Phoenix — posted annual inventory gains of greater than 100%.
All of this means that home buyers have more properties to choose from today when compared to a year ago. Supply conditions could improve even more as we move into the fall and winter months.
When you combine this with the increased bargaining power mentioned in the previous section, you can see that it’s shaping up to be a good time to buy a house. Whether this continues into 2023 (and to what extent) is hard to say. The one thing we do know is that the housing market is starting to shift in a way that could benefit buyers for a change.
House Values Could Dip in Some U.S. Cities
Home prices in the U.S. rose at an unprecedented pace over the past 18 months. Some of the hottest real estate markets saw prices rise by more than 30% in a single year. That trend has priced many would-be buyers out of the market entirely, putting homeownership far out of reach.
But this too is changing. As we reported back in August, U.S. home prices are actually showing some weakness in the summer of 2022. Prices nationwide dipped slightly from June to July of this year, and by as much as 4.5% in places like Phoenix, Arizona.
Many U.S. cities are now considered to be overvalued, from a real estate perspective. Researchers have even said the buyers in hot markets like Boise, Austin and Las Vegas could soon get burned by falling prices.
Over the coming months, many housing markets across the U.S. could see a kind of “correction” or rebalancing, where house values dip to more sustainable levels. If so, that could make late 2022 or 2023 an even better time to buy a house in some cities. Once the dust settles, at least.
After all, no one wants to purchase a home only to see its value decline. By waiting a while to see how things shake out, buyers could potentially pay a reduced price.
Related: Should you wait until 2023 to buy?
Disclaimer: This article mentions future housing market conditions in a forecasting manner. Such predictions are the equivalent of an educated guess and should be treated as such. The Home Buying Institute makes no assertions about future real estate conditions, prices, etc.
Brandon Cornett is a veteran real estate market analyst, reporter, and creator of the Home Buying Institute. He has been covering the U.S. real estate market for more than 15 years. About the author