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For months, one question has loomed large in the minds of professionals: Will the housing market roar back to life in the spring?
It is a question that arose from the slowing market of 2022 when rising mortgage rates sapped demand for new loans. Suddenly, after two years of intense competition and endless bidding wars, both homebuyers and sellers seemed to take a step back.
The slowdown continued for most of 2022. And that trained all eyes on this spring, which officially began Monday. After all, spring is when seasonality typically ignites the housing market after a long winter slumber. So, many wondered, would that happen this year? Or would the doldrums of 2022 extend into the spring of 2023?
Already there have been positive signs about this spring. A report from the National Association of Realtors this week shows that existing home sales jumped 14.5 percent from January to February, reversing a year-long trend of decline. And a report from Zillow on Tuesday indicates that, tougher conditions notwithstanding, there are still motivated buyers out there.
But to get a better sense of what exactly is happening in the real estate industry’s trenches, Inman reached out to agents across the country and asked them what they’re seeing as spring begins. The takeaway from these conversations is that after only a few days, many agents are in fact seeing an uptick in activity. Bidding wars and open houses are busy even as inventory remains tight. And while no one has a crystal ball, overall the current market conditions left many real estate professionals with a generally optimistic view of 2023. This year, it seems, may not be a total bust.
Bidding wars are back
Many of the agents who spoke to Inman said that, in a reversal from the past year or so, their markets are starting to see an uptick in multiple offer situations. Buyers are willing to compete for what little inventory they can find.
Tiffany Curry is among them and described a market that is shifting and shifting fast. Owner of Berkshire Hathaway HomeServices Tiffany Curry & Co. in Houston, Texas, she said one of her listings had been sitting on the market for about 17 days, then suddenly just received a full-priced offer and went under contract. Competition in recent days was even more fierce for another of her listings.
“And then we have another property that has multiple offers, so we’re seeing the market pick itself back up,” she said.
Jessica LaMar, with the Tim Collom Group at House Real Estate in Sacramento, California, described something similar saying that her buyers are currently facing multiple offer situations and are thus having to “get competitive really quick.”
“It feels like we’re in 2021 all over again,” she told Inman. “So I’ve been releasing contingencies and just writing highest and best [offers] right off the bat. So that’s been fun — buyers are eager again, which is really nice to see even with interest rates being a little bit higher.
Jeremy Kamm, an agent with Coldwell Banker Warburg in New York City, is also seeing bidding wars come back in parts of his area.
“The Brooklyn market is seeing and has been seeing a lot more bidding wars and fighting activity than the city,” he told Inman.
Beau Blankenship, an agent with Engel & Völkers in Santa Rosa Beach, Florida, said that the bidding war situation in his area isn’t on par with what it was in the recent past. But, he told Inman, there are still multiple offer situations, including two bidding wars just in the last week.
“Some stuff is sitting and some stuff is moving,” he said.
Open houses are in again
In addition to an uptick in bidding wars, some agents also noted that open houses — including those that happened in recent days — have become busier as the winter waned and the spring took hold.
Matthew Bizzarro, owner of the Bizzarro Agency in New York City, told Inman that last weekend — on the eve of the first day of spring — would-be buyers turned out and packed his company’s open houses.
“We had better turnout this weekend collectively than we did the rest of the entire month,” he said. “The weather’s been really nice up here and that definitely changes buyers’ mindsets and gets them more excited to be out looking at places.”
LaMar also said she is seeing open houses get busier in her market as “people just have that spring buying bug.”
Supply remains a challenge
Unsurprisingly, with more demand comes more pressure on supply, and agents told Inman that a lack of inventory — a perennial problem since the onset of the COVID-19 pandemic — remains an issue.
Kimberly Jay, with Compass in Manhattan, mostly works with buyers. She spent the first day of spring with a young couple shopping for their first home after receiving a large rent increase. Like other agents, Jay said she’s seeing the return of things like bidding wars in her market and that there are still plenty of buyers in her area. The problem, though, is that there just aren’t enough homes for everyone.
“What we’re really lacking is quality supply,” Jay told Inman.
Monique Higginson, the broker-owner of Market Source Real Estate in Salt Lake City, also told Inman that inventory is a major challenge right now.
“New inventory has been slowly going down because the inventory has been eaten up,” she said. “We are already seeing some multiple offers. They’re not necessarily above asking or crazy. We’re looking like a more normal spring, I think.”
The comments from Higginson and Jay echo the findings in Zillow’s report; though the report notes that motivated buyers do still exist, it also points out that high mortgage rates are “keeping sellers on the bench.”
Skylar Olsen, Zillow’s chief economist, further pointed out that buyers heading to the market right now “are disappointed in their options.”
“Homeowners aren’t giving up their current house and low monthly payments to join a tight, expensive market,” Olsen said in the report. “Meanwhile, volatility in the economy makes planning extremely difficult.”
Still, despite the challenges, buyers are showing up.
“I’ve been surprised to see how resilient the market is with rates going up so much,” Jay concluded, “but we’re not seeing demand decrease as rates increase.”
The signs so far are making agents cautiously optimistic
It remains to be seen how the year will ultimately play out, but many of the agents who spoke with Inman said current conditions have left them optimistic. Kamm, for example, said most buyers seem to have come to terms with the current rate situation and he ultimately anticipates having a fairly normal year.
“You’re gonna see more and more activity no differently than any other spring or summer season,” he said.
Blankenship isn’t sure how this year might unfold, but he does see the spring market as a kind of canary in the coal mine for the rest of 2023.
“What I really want to keep an eye on is if the spring market is extremely busy, you know, and we’re seeing stuff move and seeing transactions, if it’s really busy, I think the rest of the year is going to be great,” he said.
In Curry’s case, she said “everything is looking pretty good.” Though there may still be surprises, for example in the form of unwelcome rate hikes, she also said that “if everything remains as steady and stable as it is, we’re going to see good activity, especially toward the summer.”
“I think things will play out well [this spring] because what we’re hearing from the lenders is that interest rates are going to start to go down,” Curry added. “Eventually they’re going to go down, so people are very optimistic that they can refinance.”