September National Real Estate Trends
Housing is stabilizing after two exceptional years, but homeowners are facing limited options, declining listings, and affordability issues, with a slower Fall ’23 expected and no major improvement in mortgage rates anticipated for 2023.

Client Summary points – September 2023.

Summary Points

Good News

  • Housing is normalizing after two unprecedented “unicorn years”
  • Return of seasonality is a welcome sign
  • Prices are rebounding
  • Buyers are active as housing is normalizing

Reality Check

  • Homeowners have limited options between rates & inventory
  • New listings are still declining
  • Affordability remains primary challenge


  • New construction is growing, offering more options for buyers and sellers
  • Expect a Fall ‘23 to be slower than Fall ‘22
  • With rebounding prices, homeowners ready to move are in a solid position
  • Our team doesn’t expect a material improvement in mortgage rates in 2023

How to Coach Clients

If you are a first-time buyer (FTB)

  • Buy ASAP before rates drop; refi when you can
  • Number of buyers will grow much faster than number of sellers when rates drop, leading to competition+

Trade-up buyer with average to nice house

  • Buy now, for reasons in FTB
  • Make sure your home to sell is parade ready

O/O (owner occupant) Seller, not buying

  • Wait. When prices drop, demand will increase faster than supply, and your market power will increase.

Trade-up buyer with below average house

  • Wait. Your sub-par home won’t sell easily in this market with very fussy buyers.
  • When rates drop, competition will make it easier to sell.

Investor buyer

  • Buy now. Refi later

Your 90-day plan.

How to stand out

  • Most agents know what’s happening.
  • Good agents understand what’s happening.
  • Great agents can explain what’s happening.

Talking to Homeowners Makes a Difference

  • 64% of homeowners who desired to sell their home within 6 months were more inclined to do so after speaking to their agent.

Finish ‘23 strong and position for ‘24

  • Make new listings out of your old listings.
  • Work competitor’s expired listings.
  • Setup your listing campaign for September.
  • Contact 10 people every day and ask them what they think of the market.
  • Record at least 4 videos.
  • Don’t be satisfied with knowing. Push yourself to understand.

There is likely more buyer demand than seller supply, which points to slightly decreasing inventory, and steady prices. When rates (finally) drop, we anticipate a significant supply / demand imbalance – too many buyers and not enough sellers.

Source: Freddie Mac

However, the number of potential sellers is increasing. Owners with a mortgage over 5% are twice as likely to want to sell. Unfortunately, only 20% of mortgages are above 5%.


The last three times the US saw a reduction in the NEW home sales count, it took 24, 45 and 65 months to reach the bottom. We might be past the bottom on this cycle; it’s a little too soon to call it. If so, our recovery will likely take 24-30 months to regain NEW home sales volume.

A lot of Americans hold a pessimistic view of housing market’s future. The majority in the industry see a better picture. As a result, we have a lot of educating to do!!

Fortunately, attitudes are improving over time.

Source: Nerd Wallet Fannie Mae

Why are consumers so gloomy? Affordability is a challenge.

The gap between home prices and wages continues to widen

Appreciation Skyrocketed in Last 3 Years. US average = 42%.

% Appreciation in Top 20 Cities Since March 2020

Every big metric shows that we are likely past the bottom of the price drops (1 of 2).

Month on Month % Change in Home Values (Seasonally Adjusted)
Source: The Companies

Every big metric shows that we are likely past the bottom of the price drops (2 of 2).

Month on Month % Change in Home Values (Seasonally Adjusted)
Source: The Companies

There is no doubt that the housing market has reignited from a home price perspective. Firming prices have now fully erased the price pullback we tracked through the last half of 2022 and lifted the seasonally adjusted Black Knight HPI to a new record high in May.

Andy Walden, VP of Enterprise Research, Black Knight

2023 Year End Home Price Forecasts. The economists are on board, and the consumers are slowly getting there too.

December 2022 vs Current.
Source: The Companies

A nationwide panel of over one hundred economists, real estate experts, and market strategists think that prices will continue to go up.

August 2023 survey results – expected home price change
Source: HPES

What is supporting prices? Lack of re-sale homes on the market

Source: , Redfin, Black Knight

Inventory is still historically low. So many owners have low mortgage rates, they don’t want to sell.

Inventory at end of July 2023 vs July 2022

Many Investors have left the market, making it easier for first time buyers

Where are the sellers? It’s the low mortgage rates that would-be sellers are enjoying that is likely holding them back. Younger owners are more impacted by this.

Supply: Why are we short of inventory? We have not been building enough homes to keep up with demand. High labor and commodity prices are not helping. In CO, scarcity of land and water, and slow gov’t permitting processes are additional headwinds.

Supply: The number of homes being built to rent exceeds the number being built to sell, for the first time.

Demand: We have a large demographic cohort that is in their prime years to be first time buyers.

Source: KCM and Census Bureau.

Demand: there is a lot of pent-up demand from Millennials.

Home ownership by cohort.

Source: Apartment List

Will there be a Foreclosure Boom like ‘07?


Lending standards are still very strict compared to the housing bubble (that led to the 2007/08 crash)…
Historical data for Mortgage Credit Availability Index (MCAI)

Source: MBA and KCM

The number of foreclosure filings is a great leading indicator for the number of foreclosures in the next 6-18 months. There is a modest uptick, but we’re at 10% of the level of 2010.

U.S. Properties with Foreclosure Filings: ATTOM 2021 Year-End Report

Source: KCM and ATTOM Data Solutions

Will the number of foreclosures go up? The leading indicator is delinquencies – consumers currently behind on their mortgage. We’re near record low levels.

Source: Black Knight, McDash

In 2010, 28% of the homes had negative equity, leading to many foreclosures. Currently, 3.7% of homes have negative equity. Owners in financial distress can easily afford to sell their homes without a short sale.

Bars: % US homes with negative equity. Line: Total market CLTV (combined loan to value)

Source: Wall Street Journal, Black Knight.

Homeowners are sitting on record amounts of equity

The economic environment now is much different than before the 2007 crash.

Will Mortgage Rates Go Up or Down?

Mortgage rates are up; now at the highest rate since 2001. The amount of home you can buy with a $2500 monthly payment has declined a lot as a result.

The average 30-year mortgage rate.

Source: Bank Rate

Mortgage rates increased in ‘22 but are still historically quite attractive.

The average 30-year mortgage rate by decade.

Source: Freddie Mac, KCM

In some ways, the mortgage rate is less relevant that it was a few years ago. A record number of people are paying with cash. Among the buyers that borrow, the size of the downpayments is going down (probably due to the higher home prices).

Source: RedFin

The experts expect declines in rates in 2024. In mid-September, rates were around 7.18%. I think the rates will remain higher than the “experts” think, unfortunately.

Source: as indicated
  1. Mortgage Rates & Recessions. There have been six recession in the last 50 years. The 30- year mortgage rate fell every time. The average decrease was -2.4%. To learn from history, we should segment these recessions into era of high rate and low rates.

Inflation: Historical Perspective
Consumer Price Index (CPI): All Urban Consumers (% Change Y-O-Y, Seasonally Adjusted)

Mortgage Rates Tend to Track Government Bonds and Inflation, with a Lag

  1. Mortgage Rates & Recessions. The first three recessions are not too relevant to today’s situation, as their starting rates averaged 11%. The three most recent recessions (average start rate = 5.7%) provide better insight to what we can expect.
Source: Ironton capital analysis
  1. The spread or gross profit is the difference between the ten-year treasury and the average 30-year mortgage rate. Currently the spread is 2.9%!: Mortgage rates should decline when there is less economic uncertainty.
    • 50-year trends for the benchmark 10-year treasury, the 30-year fixed mortgage, and spread.
Source: KCM, Freddie Mac, Macrotrends, YCRE analysis. ’23 data as of 6/12/23 report.
  1. The spread or gross profit is the difference between the ten-year treasury and the average 30-year mortgage rate. Currently the spread is 2.9%.

50-year trends for the spread between the benchmark 10-year treasury and the 30- year fixed mortgage.

Source: KCM, Freddie Mac, Macrotrends, YCRE analysis. ’23 data as of 5/10/23
  1. The spread or gross profit is the difference between the ten-year treasury and the average 30-year mortgage rate. Currently the spread is about 3.0%.
Source: KCM, Freddie Mac, Macrotrends, YCRE analysis. ’23 data as of 5/10/23

2- The spread or gross profit is very high

The only times the spread approached or exceeded 300 basis points were during periods of high inflation or economic volatility, like those seen in the early 1980s or the Great Financial Crisis of 2008-09

George Ratiu, Chief Economist,

It’s reasonable to assume that the spread and, therefore, mortgage rates will retreat in the second half of
the year if the Fed takes its foot off the monetary tightening pedal and provides investors with more
certainty. However, it’s unlikely that the spread will return to its historical average of 170 basis points, as some risks are here to stay.

Odeta Kushi, Deputy Chief Economist,
First American

Mortgage Payment to Income Ratio (2000-2021) Assumes a 30-Year Fixed Rate Mortgage with a 20% Down Payment on a Median-Priced Home with a Median Income (P&I payment to income)

Pros vs. Cons of Buying During a Recession

How Do Increasing Rates Impact the Market?

The number of applications for new mortgages is down from prior years (start of the funnel). The number of rate locks is also low (middle of funnel). As a result, the number of closings (end of funnel) is also low.

Source MBA Mortgage Banker Assoc

The number of homes sold is off -35% in Nov ‘22 vs Nov ‘21. This is more of a correction than the past three incidents. Volume improved each month since then.

Source MBA

How sales unit counts compare to the long-term trend. The deficit in the sales count vs. long term trend line in 2022/23 is about the same as the excess number of homes we sold in 2020/21.

History has shown that higher rates may take the steam out of rising prices, but it doesn’t cause them to collapse entirely. This is especially true in today’s housing market, where the demand for homes continues to outpace supply, keeping the pressure on house prices.

Mark Fleming,
Chief Economist, First American

Nationally, MOI (months of inventory) is better than the “unicorn years” of 2020/21, but still very low historically. This and high rates are limiting buyer activity.

People are staying in their homes for much longer than they used to. No surprise, the count of new listings is down a lot.

Number of years in home before selling

Listing Counts Low in Every Category Compared to Last 3 Normal Years (preCOVID).

Here’s another way to look at the inventory situation. The number of new listings in the US in ‘23 has been significantly less than prior years.

New monthly listing counts.

I didn’t fully anticipate how much the move in interest rates would convince people not to put their houses on the market.

Tom Barkin,
President, Federal Reserve Bank of Richmond

The western US has suffered more of a slow down than the rest of the country. Sales price and showing traffic is improving, but sales and pending sales are still low.

Sources: NAR, KCM

August continued the downward trend in numbers, hitting a record low as opposed to the past several years. Listing agents are hopeful that the fall season will see an uptick!

Source: 29 Cities that make up Denver Metro Area from ShowingTime

Despite economic uncertainty, it might be a good time to buy. Rent have been increasing over 4% annually for 30 years.

Actual and projected rents (US Average)

Sources: Census Bureau, KCM

What’s Next for Short Term Rentals?

There are more active airBNB than active listings for sale.

Supply is growing faster than demand, so occupancy will decline modestly (around 2%) in 2023. However, ADR will still eke out modest gains. The industry will still outperform pre-COVID stats.

Overall, global airBNB volume is growing rapidly post-COVID

Once mortgage rates come down, it’s possible that sellers will perceive it is once again a good time to list. This increase in STR supply could be short lived. Urban will be hit most.

How do Americans Feel about Real Estate?

Financial Benefits of Homeownership

  • Building Equity
  • Control over expenses
  • Long-Term savings
  • Building Wealth
  • Strong Credit History

Social Benefits of Homeownership

  • Civic Participation
  • Financial Education
  • Health Benefits
  • Privacy
  • Property Improvements
  • Home Office

Tax Benefits of Homeownership

  • Motgage Interest Reduction
  • Poperty Taxt Reduction
  • Imputed Rent
  • Profit from Home Sales

Americans are still enthusiastic about real estate. Real Estate has been voted the best long-term investment for 11 consecutive years!

Source: Gallup

Results of May 2023 consumer research:

  • 78% of Americans associate homeownership with the American Dream
  • 65% see homeownership as a means of building intergenerational wealth.
  • 68% of Millennials and Gen Z say investing in real estate is a smart financial decision.
  • 43% of Millennials and Gen Z are considering buying an investment property.

Interested in Passive Real Estate Investing?

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Chris Lopez
Chris Lopez is a Denver area real estate entrepreneur and investor, as well as the host of Bigger Pockets’ House Hackerz and the Denver Real Estate Investing Podcast.
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