Everyone in the mortgage and real estate industry is well aware of the shift in the market we experienced in 2022. Most, if not all, would describe the first half of 2022 and the last half of 2022 being two vastly different markets.
In the first half, there was record low inventory and high buyer demand due to low interest rates. This was quickly followed by hikes in the interest rates and a slowdown in the market in the last half.
By taking a look at Altos Research Data and HW Media‘s most recent event, The HousingWire December Forecast, which was exclusive to HW+ members and clients of HW Media, we can help our clients understand the constantly changing market and look at what we can expect in 2023. Data can change on a week-to-week basis or even daily so it is critical to understand how to plan for the future. Changes in the market can happen quickly as we saw with the COVID-19 outbreak and then the shift in the market in 2022.
Mike Simonsen, president at Altos Research, joined HousingWire’s Lead Analyst Logan Mohtashami for a housing forecast event to walk through the current shift and how we can use the leading indicators to show what is happening in real-time to make future predictions. Both agree that the two biggest housing indicators going into 2023 are mortgage rates and housing inventory.
As marketers in the housing industry, a deep knowledge of mortgage rates and inventory is vital to informing our marketing strategy. A good marketer is nimble and able to pivot iin response to these indicators and how they shape the market. Despite the end of 2022 data showing us a decline in inventory, we can look to leading indicators in the data to show positive trends for 2023.
Mohtashami indicated that we started to see a shift in the market last fall when mortgage rates were at their peak of over 7%. In November, we started seeing rates fall by 1.25% which led to seven straight weeks of positive trends in purchase application growth which looks out 30 to 90 days. A savvy marketer will understand that purchase application data is a future forecast of the direction of the market and should keep a close eye on this data point. These trends show that the market is stabilizing and most of these leading indicators happened in the last few weeks according to Mohtashami.
We can also look at data trends for the current market inventory to predict positive signs in inventory in the spring season. Simonsen pointed out that by looking closely at the available inventory data it is parallel to the purchase application data. “We will see inventory growth throughout the year, it is just a question of how much,” says Simonsen. He also pointed out that the current data is normal due to inventory typically being lower at the end of the year due to the holidays.
It is important to also note that we were in a tough spot in 2022 we needed to balance out the market which was done by the Federal Reserve. This balancing act has to be looked at closely due to the fact that the changes happened so quickly. Mohtashami went further to say that sellers had too much power and the Federal Reserve was 100% correct in their action because we have to get back to a healthy real estate market. The shift is starting to have positive signs at the end of 2022 like mortgage rates staying above 6%.
Understanding the market and the changes we are experiencing are crucial for any marketer in the industry.
Following the data, and understanding these sources is also important and should be used as a tool to relieve the anxiety about how healthy we perceive the market to be. We as marketers in this industry also can start to interpret the data and make informed decisions based on future data that can help our strategy and end goal in what seems to be a constantly changing real estate market.
