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With January under our belt..what do we see for Real Estate
for the near term: (** NEW Stats are further down)
We are not in a “housing bubble”. What we saw in the great recession is not what is happening now. We expect some year over year adjustments, but don’t envision a systemic drop in home values 2023/2022.
Same but different. The first and second quarter of 2023 will see challenges. Prices will likely remain flat or decline. Higher interest rates may cause a pumping of the brakes for Buyers and on the Seller side hesitancy to sell as a result of current high interest rate mortgages. Q3 and Q4 may see a substantial increase in activity.
Inflation appears to have seen its peak: The rate of personal consumption over the last 2 years is unsustainable given the combination of low personal saving rate and elevated ratio of debt to personal disposable income among consumers. We suspect the worst may be behind us.
What about Mortgage Rates: As we move into 2023 and economic data is rolled out - it may be a roller coaster ... With a mild recession, rates will continue to improve. Recessions are almost always good for lower interest rates and affordability. The Real Estate sector of the market is one of the most interest rate sensitive.
Increasing inventory? The big question…Demographics indicate the sector of our population moving into prime buying years will increase demand. Combined with Sellers’
hesitancy to sell their homes and home builders, building fewer homes for several years will likely keep inventory at reasonable levels. Welcome a more balanced market.
A Buyer’s market been defined in the past as 6 months of inventory. Currently, 2-3 months of inventory is a Buyer’s market. As the market moves close to that in 2023 we expect to see a more balanced market.
Reality check for Sellers: No more selling the home “as is” throwing a price up to see if it sticks. Those days are in the past. Sellers will want to “win the beauty contest” when their home is placed in the new balanced market. Pricing a home correctly, in the beginning, will increase the homes salability.
New Construction:
Permits for new construction are down and Builder Confidence is being tested. We may see more aggressive pricing among new home builders. And likely more incentives for Buyers.
There are more questions than answers..as data is released we may
have more answers. More layoffs? Job growth? Interest Rates in the
future? Stock market? What else?
If anyone has a working crystal ball—please share it!!
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