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M R EP O RT | 27 COVER STORY fidence in the market. This may occur in late 2023 or early 2024. Hale: Additional construction is needed to help alleviate the long- term housing shortage that the market continues to grapple with. This shortage has prevented more drastic adjustments in price, even in the face of short-term weakness in housing demand. But in the longer run, the market will work better for everyone if housing is not in such short supply. Dr. Lautz: Homeowners are likely feeling discouraged from listing their home on the market, espe- cially if they refinanced or pur- chased in the 2.5%-3.5% interest rate range. However, it is important to keep in mind sellers move because a life change takes place—a family change, a new job, or an economic shift in the household will cause sellers to move regardless of the recent increase in interest rates. Rood: The year 2023 is likely to reflect the "Catch 22" for sellers currently—prospective sellers do not want to list because there is nothing to buy, and there is nothing to buy because nobody is listing. Sellers also struggle with the "locked-in effect" of having to give up their record-low mortgage rates to move and accept a new mortgage rate that is consider- ably higher (psychological and economic impediments to listing). I do not anticipate a wave of new supply in resales or new con- struction in 2023 unless interest rates get back into the 5.5% range again. The lack of new listings will make sale prices stickier—less likely to drop considerably—when you consider that home inven- tory levels are still near record lows and trending downward (e.g. supply of existing homes for sale is only about one-fifth of the supply on the market in 2007). Sharga: First of all, what con- stitutes a "sellers' market" is high demand, low inventory, and rising prices—pretty much a perfect de- scription of the market from mid- 2020 until this year when Federal Reserve actions poured ice water on the overheated market. With the majority of homeowners now holding mortgages with sub-4% rates, we are not going to see massive numbers of homes listed for sale, since the owners would be trading in that low-rate loan for one with rates two to three points higher; they will simply wait for market conditions to improve, which will keep inven- tories low. Home prices, while still higher on a year-over-year basis, have also been falling nationally for the past three months, another trend that will keep homes off the market. And demand, because of worsening affordability, has weak- ened over the past few months, so there is less competition among buyers to help sellers get the best price. The combination of these factors leads to a simple conclu- sion: any homeowner who can wait to sell will wait to sell. What will bring more homes to the market? Mortgage rates must drop back below 6%, and wages need to continue to rise, which will spark demand. That, in turn, will help stabilize home sales prices and potentially reverse the decline, which will then signal homeowners that it is safe to list their properties. I do not expect that all to happen in 2023; more likely we see things start to im- prove later in the year and see the market come back in 2024. ERIC C. PECK has 20-plus years' experience covering the mortgage industry, he most recently served as Editor-in-Chief for The Mortgage Press and National Mortgage Professional Magazine. Peck graduated from the New York Institute of Technology where he received his B.A. in communication arts/ media. After graduating, he began his professional career with Videography Magazine before landing in the mortgage space. Peck has edited three published books and has served as Copy Editor for Entrepreneur.com. SOMETIMES, IT'S GOOD TO BE A FOLLOWER. Follow MReport on social media to put the latest mortgage banking news, stories, strategies, and insights at the touch of your fingertips. MReport @TheMReportNews The MReport