What can we learn from 2023 that will shape the trends we see in 2024?

Despite fewer overall home sales and high mortgage rates, the housing market remained surprisingly resilient throughout 2023. The key factor underpinning this strength was a severe lack of homes available for sale.

The New Normal: A Market Defined by Shortage

In the post-pandemic era, the idea of a “normal” market is changing. Data from 2023 established a trend of contraction, meaning there is simply less activity, but what activity there is moves quickly.

Compared to pre-pandemic years (like 2018), we are seeing drastically lower figures across the board (Source: Bright MLS):

  • Fewer New Listings: 124,000 fewer new listings entered the market.
  • Fewer Home Sales: 52,000 fewer home sales occurred.
  • Big Drop in Inventory: A significant decline in the number of homes available for sale.

Even with mortgage rates that caused many buyers to pause, the persistent demand for homes was more than the available supply, leading to continued price growth.

The Result: Continued Price Appreciation

Home prices continued their upward trajectory, even in a high-rate environment.

  • Home prices went up by 3.4% in 2023.
  • The median home price reached $385,000 (Source: Bright MLS).

This steady appreciation underscores the fundamental imbalance: demand far outweighs supply.

Looking Ahead: The Next 3 to 5 Years

What can we expect for the housing landscape in the mid-term future? The market appears set to continue operating under the pressures of limited inventory and strong buyer desire.

Analysts predict a continuation of these structural trends for the next three to five years:

  1. Persistent Undersupply: More people will be wanting homes than there are homes available.
  2. Limited Buyer Options: Buyers will continue to face tight choices and strong competition.
  3. Continued Price Increases: Prices will likely continue to trend upwards, though perhaps at a more moderate pace.
  4. Quicker Sales: Homes that are priced correctly and show well will sell fast.
  5. More Cash Transactions: Cash-heavy buyers may continue to have a competitive advantage over financed buyers.

Staying informed about these insights is crucial for both buyers and sellers looking to navigate this dynamic and unpredictable market.