
The year 2023 is turning into a horror show for the residential real estate market, with the menacing ghost of the subprime crisis looming large.
The real estate market is being throttled by the deadliest mortgage rates seen in 23 years, plunging home sales into an abyss not witnessed since the dark days of 2011.
The chilling forecasts from economists paint a grim picture that sends shivers down the spine of the industry.
Redfin’s economic research lead, Chen Zhao, tosses a bone-chilling figure into the fray, estimating the total existing-home sales for 2023 to skid around a spine-tingling 4.1 million, marking the most terrifying sales figures since the financial phantasm of 2008.
And there’s no light at the end of this haunted house, as Zhao ominously predicts a stagnant market with mortgage rates refusing to loosen their death grip.
Unlike the gruesome tale of the early 2000s housing bubble burst which left the economy in ruins and millions evicted from their homes, this year’s horror unfolds as a trilogy of doom: escalating borrowing costs, sky-high home prices, and a desolate inventory of homes for sale.
The mortgage rates, which have soared to a blood-curdling 7.57% last week, have cast a dark spell, scaring away all but the most die-hard homebuyers.
As the Mortgage Bankers Association reveals, the purchase mortgages have plummeted to their lowest since the cursed year of 1995, foretelling a bleak and ghostly market in the coming months.
If the prophecy holds true, and the existing home sales tumble below the four million mark, it would open a portal to a nightmarish reality not seen since 1995.
The haunting effects of the shriveling housing market threaten to cast a dark shadow across the whole economy, forcing aspiring homeowners into the clutches of rising rent, and hindering the Federal Reserve’s attempts to halt the interest-rate hikes if rents continue their ascent to the haunted heavens.
The eerie slowdown could also stifle economic growth, strangling spending on housing-related commodities like appliances and furniture, and haunting home builders into retreating from new constructions.
The tale of terror doesn’t end there.
While some well-maintained homes in good neighborhoods are being snatched up by brave souls willing to pay more than the asking price, a staggering 18% of homes listed in September bore the mark of price reductions, signaling the highest level of price cuts since the ominous November of 2022.
In a real estate market cursed by the ghosts of high mortgage rates, limited inventory, and affordability that has decayed to its lowest since 1985, the dream of homeownership is turning into a frightful fantasy for many.
Home builders, once sheltered from the storm by the scarcity of existing homes, now find themselves in the chilling grasp of the market’s cold hands as even their incentives fail to lure buyers into the dark woods of homeownership.
With just 16% of consumers daring to say it’s a good time to buy a home, and the confidence of home builders crumbling like a haunted mansion, the eerie saga of 2023’s real estate market sends a cold, foreboding chill down the spine of the American dream.