2023 Forecast (CONT’D FROM PAGE 28)
Board Converting NEWS INTERNET DIRECTORY
Limited affordability is discouraging consumers from signing on the bottom line. Median prices for existing single-family homes are expected to increase 11.5 per- cent when 2022 figures are finally tallied. That comes off a strong 18 percent increase in 2021. Any relief will only come in 2023, when prices should decline by 2.6 percent. While affordability has sunk to its lowest level since late 2007, the 30-year fixed mortgage rate is within striking distance of its highest level in over a decade, leading to a decline in purchase applications. Tight housing supply is only adding to upward pricing pressure. The inventory of for-sale homes remains his- torically low, and new ones will be scarce on the ground. “We expect housing starts to fall by 1.8 percent and two percent in 2022 and 2023, respectively,” said Yaros. “This compares with a 15.1 percent increase in 2021.” There’s only so much the industry can do to bolster housing supply—one big reason being the above-men- tioned labor shortage. “The unemployment rate for expe-
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rienced construction workers is about as low as it’s ever been,” said Yaros. “Capacity limits have delayed housing completions and contributed to a record number of hous- ing units in the pipeline.” One bright spot in the housing picture: Mortgage credit quality has never been better. “The percent of loans de- linquent and in foreclosure is at a record low,” said Yaros. “This goes to the stellar underwriting standards since the financial crisis, and borrowers’ credit scores are much higher.” While lending standards for mortgage loans are now tightening, the credit spigot is unlikely to seize up as it did during the financial crisis of 2008. Looking Ahead Given the above concerns, it’s little wonder corporate confidence is taking a hit. As the calendar turns to a new year, companies are responding to soaring interest rates and inflation by scaling back the capital investments that help fuel the economy. “Up until the second half of 2022, most companies were taking advantage of low rates to plan ahead for equipment purchases and expansion op- portunities,” said Palisin. “Now, though, many are taking
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30 October 31, 2022
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