Real Estate Forecast for 2023

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It was certainly a tumultuous year for the housing market. In the beginning of the year, we saw houses flying off the market, usually at well over asking price. Open house lines were out the door and homes were listed for only a few days before offers were accepted. But as the year progressed, we saw prices rise in almost every area with mortgage rates jumping as well, causing consumers to tighten their purse strings. Additionally, a housing shortage made the market even more competitive and volatile.

So, what should we expect for 2023? The short answer is – it depends.

Many experts predict that home prices will drop, albeit slightly, in the coming new year. While that may sound appealing to potential buyers, the truth is affordability will be a major roadblock for new buyers as inflation continues to rear its ugly head. Most consumers are still feeling the pain at the pump, at the grocery store, and seemingly everywhere.

High mortgage rates continued to deter potential buyers with the sticker shock of monthly payments, as they’ve more than doubled throughout last year from near 3% to 7%. Even with the possibility of lower listing prices, many home browsers will continue to do just that: browse. But in recent weeks rates have dropped a bit, leading some to project, and hope, that it could be a sign of things to come next year.

One of the lessons to keep in mind at this point is patience. If you moved into a new residence a few years ago, you likely got a favorable rate. For many people, that was their first home purchase. Now their families are growing, they have makeshift home offices because of a jump in remote working due to the pandemic, or they simply want more room. The best course of action would be to stay put and enjoy the monthly payment you are comfortable with until things balance out.

When will that be? While Realtor.com predicts that the scales could tip in favor of buyers in 2023 in terms of available inventory, it’s important to remember that overall inventory remains historically low, leading some people to get creative with their living arrangements by purchasing a home together with loved ones or friends. Most buyers, however, should not expect a full-on swing towards a buyer’s market come the new year; in fact, given the constant unknown of the state of the economy, Realtor.com is calling it a “nobody’s market”.

Redfin also thinks many would-be buyers will have to put off pulling the trigger on a home purchase until rates lower and recession threats dissolve. They 2023 will see predict fewer home sales than any year since 2011 and the lowest housing turnover rate since the 80s.

As we close out 2022 and look ahead to a new year, remember to have realistic expectations. Making a move may not be in the cards right now and it’s important to keep your emotions in check. The numbers don’t lie, and you never want to get into a situation where you are in over your head just to be in your dream home.

If you need help figuring out your best move for 2023, reach out to the Home Navigators Team today and talk to a seasoned and reliable real estate agent who has your best interest in mind.

About Maryanne Elsaesser

Maryanne Elsaesser is known for individualized strategic planning and solving complex matters with calmness. Her clients say she is a "brilliant negotiator," tenacious, helpful, smart, creative, focused and has an amazing ability to read people. Consistent hard work puts Maryanne in the top 1% of brokers in the country. Maryanne is well-versed in contractual elements and understands the intricacies of navigating the most profitable net gain in each transaction. She can be reached at 551.206.9264 or maryanne.elsaesser@gmail.com.

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