2023 Real Estate Forecast

It’s always tough looking into the future without a crystal ball.  The only thing to rely on is past experience.  Yet the problem is we have never gone through a pandemic, followed by a real estate boom, followed by high inflation, and higher mortgage rates.  Some experts are calling for a recession, and slower real estate sales.  The last recession that began in 2007 was driven by mortgages that were given out like candy, with little or no oversight as to the buyers’ ability to make payments in the future.  This was compounded by 8 million job loses, taking away the means of many buyers to make those mortgage payments.  Many foreclosures began and continued for years.

Moving to the present, laws were enacted to prevent predatory lending, and make sure buyers could afford their payments.  Therefore, most mortgages today are much more stable than in 2007.  Also, there seems to be plenty of jobs available for those who want to work.  So, at least currently, there seems to be no danger of mass unemployment.  One of the biggest reasons preventing a recession in real estate is inventories.  In most parts of the country, and especially here, there are not enough houses on the market to fill buyers’ needs.  During and after the pandemic a home-buying frenzy began.  This was partially caused by many workers having the ability to work remotely, and partially by the rush to buy vacation rental properties.  Then this year when mortgage rates increased, many homeowners with mortgage rates in the 3 to 4 percent range have been reluctant to sell their homes knowing the mortgage rate on a replacement home would be considerably higher.

Now the forecast:  It appears to us that home prices will stabilize at current levels or decrease slightly in the first half of 2023.  Home sales will decrease some, mostly due to insufficient inventories of available homes.  We also believe that mortgage rates will drop some from current levels as demand decreases.  However, the days of 3 percent mortgages are definitely behind us.

If you are looking to buy a home, or looking to sell, let us help you navigate the housing market.