The Housing Market in 2023: What Lies Ahead? With Susan Wachter, Wharton Professor of Real Estate

The housing sector took a hit in 2022 due to moves by the Federal Reserve to raise interest rates and the level of inflation in the economy

The real estate sector specifically has taken the brunt of the Federal Reserve's aggressive stance on monetary policy, resulting in a housing recession that is pulling down the rest of the economy

There has been a pullback in weekly mortgage applications data, and pending home sales and existing home sales are at historic lows

Housing prices have been increasing in a historic range over the past preceding year and are now coming down

The decline seen in the past few months is a sharp reversal of these price increases, due in part to the fact that interest rates have doubled from March

The expectation is that the Federal Reserve will slow raising rates in the next couple of cycles, but mortgage rates will still be double what they were a year and a half ago

The housing market is facing a supply issue as well, with a structural deficit in housing supply and a lack of construction and inventory

The pandemic and supply chain issues have further exacerbated the supply shortages, and this is what's keeping housing prices from plummeting

Homeowners with low mortgage rates are not moving, resulting in mobility at all-time lows

The Fed's inflation policy is exacerbating the supply shortages, by making homeowners with low mortgage rates hold on to their homes.