As a real estate broker here in Madison, I am fielding many questions about what is to come with the market in 2023. I’d love to summarize our Husky Homes local market projections using my favorite economic laws of supply and demand.
- Supply will (unfortunately) stay at historical lows. Yes, we see supply ebb and flow in Wisconsin based on seasonality and other factors, but we have a LONG way to go before we’re at pre-pandemic levels of supply, and even further to go to reach a balanced market. We’re also now battling the fact that many homeowners bought or refinanced into historical low interest rates, so when these home sellers want to buy something new, they face a unique circumstance in comparing their likely impressive equity position with the affordability of higher rates and decreased purchasing power.
- (Buyer) Demand continues to be high, as Madison is continuously ranked a top national destination to live, and as the Greater Madison Metropolitan Area continues to boom with new residential + commercial development. Madison is also the top city in the nation for hiring Gen Z! We continue to have incoming growth, no matter which way you look at it. Now, the fastest, steepest interest rate hike we’ve EVER seen absolutely shifted demand in the summer of 2022, though the 2-3% interest rates we saw in the initial COVID years were never going to be sustainable, and demand persists — but (thankfully) not as chaotic & frenzied as we saw the past couple years. Interest rates will be an important factor to keep an eye on in 2023, and if they start to taper down (as is projected), we expect demand to continue to surge.
- Prices will keep going up. That’s how it works; low supply + high demand = rising prices. Our team during the holidays last month, which tends to be the slowest time of the year, was seeing competition for listings with nearly 10+ offers, clean terms & prices significantly above asking. I expect this is due to the lowest inventory we see any time of year (Thanksgiving through New Year's) + interest rates starting to drop, and buyers *hoping* to get in before Spring craziness begins. Of course, this won’t be for all listings, but as we continue to fight with a desperate need for more homes to sell to meet the buyer demand, we expect prices to continue to rise due to the competition.
