Housing market will stabilize.

Due, in part, to the ongoing inventory crunch keeping home prices elevated, many economists predict the housing market is more likely to correct itself from the double-digit percentage jumps in home prices we’ve seen over the past few years rather than crash.

S&P CoreLogic Case-Shiller Home Price Index posted a month-over-month national price growth reading of 1.3% for March before seasonal adjustment. After a seasonal adjustment, the month-over-month increase was 0.4%.

This is the second consecutive month of modest national increases following seven months of consecutive decreases. Experts consider this latest trend an indicator that home price declines are now a thing of the past.

“Two months of increasing prices do not a definitive recovery make, but March’s results suggest that the decline in home prices that began in June 2022 may have come to an end,” said Craig J. Lazzara, managing director at S&P DJI, in the report. “That said, the challenges posed by current mortgage rates and the continuing possibility of economic weakness are likely to remain a headwind for housing prices for at least the next several months.”

Nonetheless, experts say whether home prices rise or fall in the coming months will likely depend on where you’re looking.

For instance, southeast metros, such as Miami, Tampa and Charlotte, North Carolina saw year-over-year gains ranging between 4.7% and 7.7%, but it’s a different story in other areas, most notably in cities such as Austin, Texas; Boise, Idaho; Salt Lake City and West Coast areas that saw big price booms during the pandemic.

“The farther west we look, the weaker prices are, with Seattle (-12.4%) now leading San Francisco (-11.2%) at the bottom of the league table,” said Lazzara. “It’s unsurprising that the Southeast (+5.4%) remains the country’s strongest region, while the West (-6.2%) remains the weakest.”

Despite some areas seeing price declines, experts point out that today’s homeowners stand on much more secure footing than those coming out of the 2008 financial crisis, with many borrowers having positive equity in their homes. Consequently, the likelihood of a housing market crash is low.

“Homeowner equity is at the highest level it’s been in the past several decades, so homeowners have a lot of value in their home,” says Nicole Bachaud, an economist at Zillow.

Will There Be a Lot of Foreclosures in 2023?

In April, foreclosure filings were down 10% from March but up 8% from last year, according to ATTOM, a property data provider. Foreclosure completions were down 39% from the previous month but increased 3% from a year ago.

“Foreclosure activity continues to stabilize and even correct itself in 2023, with April showing a 10% decrease in overall activity after a 20% increase [in March],” said Rob Barber, chief executive officer at ATTOM.