Auction.com: One-Third of Buyers Expect Home Prices to Decline

(Courtesy Auction.com, Irvine, Calif.)

Nearly one-third of buyers expect home prices to decline in their local housing market in 2023, nearly double the 17 percent who said the same in 2022, reported Auction.com, Irvine, Calif.

Auction.com surveyed distressed property buyers from across the country who have used the platform to purchase homes at foreclosure auction or bank-owned (REO) auction in the last four years for its 2023 Buyer Insights report.

“Local community developers buying at distressed property auction are on the frontlines of the housing market and provide a reliable barometer for emerging real estate trends,” Auction.com CEO Jason Allnutt said. “They are telling us 2023 will bring further home price declines in many areas but also increased opportunities to convert distressed properties into affordable housing supply as prices adjust to a new market-driven equilibrium.”

More than nine in 10 buyers surveyed (92 percent) described themselves as either local community developers (77 percent) or owner-occupant buyers (15 percent). The owner-occupant share of buyers nearly doubled from 8 percent in the 2022 survey. Separate sales data from Auction.com shows that 82 percent of properties purchased on the platform in 2022 were within 100 miles of the buyer’s mailing address. The median distance between buyers and properties was 15 miles for homes sold at foreclosure auction and 21 miles for homes sold at REO auction.

Buyers located in the West region of the country were the most bearish about home price appreciation in 2023; 43% said they expect home prices to decline for the year. The report noted 37% of buyers in the Southeast region said they expect home prices to decline in their local markets, the second-highest percentage among the U.S. regions and up from 12 percent in the 2022 survey.

Despite rising expectations for a home price correction in 2023, 87 percent of buyers said they planned to increase or keep the same their property acquisitions for the year, up slightly from 86 percent in 2022.
More distressed buyers are shifting to a renovate-and-rent investing strategy in the slowing 2023 market even while renovate-and-resell remains the dominant strategy. Half of all buyers surveyed said that renovating and reselling to owner-occupants was their primary investing strategy, down from 61 percent in 2022. Meanwhile, 39 percent of buyers surveyed said renovating and holding for rental was their primary investing strategy, up from 32 percent in the 2022 survey.