How to know when housing bottom is in

Chicago realtor Jeremy Fisher headed to Florida after Christmas counting on five mostly-relaxed weeks, after a slow second half of 2022 left him with a bunch of unsold listings exiting the year.

Instead, the Compass broker ended up flying back to the Windy City three times during his low season, as seven homes went into contract and his husband ended up driving their baby home from Florida alone. The great real estate bust, it seems, has found something like a floor.

“For somebody, it’s always the right time to buy a house,” Fisher said. “People for the most part have come to terms with interest rates.”

After only a few months in the tank, is the U.S. housing market close enough to a bottom that it’s time for those on the sidelines to at least start thinking about buying as spring shopping season nears?

Signs are accumulating that the big price bust — and mortgage-rate relief — that buyers wanted isn’t materializing, at least not soon.

Goldman Sachs trimmed its estimate of peak-to-trough declines in nationwide home prices to 6 percent from 10 percent in late January. Online housing marketplace Zillow now expects prices to rise slightly in 2023. Existing home sales, which were running at a 6.5 million annual pace in early 2021, have begun to stabilize around 4 million, with the National Association of Realtors forecasting 4.8 million for the year. Meanwhile, mortgage rates, which dipped under a 6 percent national average on Feb. 2 after more than doubling since mid-2021 to almost 7.4 percent, have jumped back to 6.75 percent, driven by a scorching January jobs report.

No bust, but a standoff between buyers and sellers

Instead of a price bust a la the one after the mid-2000s housing bubble, what’s developing is a standoff, says Logan Mohtashami, lead analyst for HousingWire in Irvine, Calif. On the one hand are buyers who would like homes to be as affordable as in 2019. But a big share of them either have to move or can afford to despite higher prices and rates. On the other are sellers, under no pressure to move since they have cheap mortgages and plenty of equity for now. So far, sellers are hanging tough in most cities. Even small increases in demand can keep prices firm, or move them higher, because inventory is so tight, Mohtashami said.

The recipe for 2023’s housing market is shaping up as prices that are roughly stable nationally, but with ongoing drops in some regional markets, interest rates that decline but not hugely, and buyers’ incomes that rise. Experts think they will combine to make affordability improve, maybe to near-normal historical levels, but still fall well short of where home buyers stood when mortgage rates were 3 percent or even lower.

“Households have two incomes, and you have to earn about $100,000 to buy a house,” Mohtashami said. “There are…