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This Week In Real Estate – Jan. 1, 2023

Central Oregon Real Estate - This Week In Real Estate

Expectations For 2023.

As 2022 came to a close and we ring in the new year this week in real estate, the predictions and expectations for 2023 from pundits were plentiful. The safest forecast is the market/economy will be determined by what happens with inflation. Below are a few newsworthy events from the final week of 2022 that influence our business:

What To Expect From The Housing Market In 2023.

The 2022 housing market has been defined by two key things: inflation and rapidly rising mortgage rates. And in many ways, it’s put the market into a reset position. As the Federal Reserve (the Fed) made moves this year to try to lower inflation, mortgage rates more than doubled – something that’s never happened before in a calendar year. This had a cascading impact on buyer activity, the balance between supply and demand, and ultimately home prices. And as all those things changed, some buyers and sellers put their plans on hold and decided to wait until the market felt a bit more predictable. Moving forward, experts agree it’s still going to be all about inflation. If inflation is high, mortgage rates will be as well. But if inflation continues to fall, mortgage rates will likely respond. Homes prices will always be defined by supply and demand. That means nationally, we’ll likely see relatively flat or neutral appreciation in 2023. As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says “after a big boom over the past two years, there will essentially be no change nationally . . . half of the country may experience small price gains, while the other half may see slight price declines.” The 2023 housing market is going to be defined by mortgage rates, and rates will be determined by what happens with inflation. Full Story…

Rates Heading Higher To End 2022, But 2023 Is A Blank Canvas.

Perhaps it’s some small consolation to think of 2022 as the bill that came due for the massive housing/mortgage market party that took place in 2021 and much of 2020. During that time, huge milestones were achieved: (1) the average home appreciated by roughly 40%, even after accounting for the modest correction in prices seen in the past few months, (2) home sales exploded to levels well above anything else seen during the past decade, (3) rates plummeted well into new all-time lows and stayed there for much longer than any previous stint, and (4) even if we shift gears to the stock market, we find gains of almost 50%. Even after the crummy 2022, stocks are still up roughly 20% from pre-COVID level. All that to say, yes… 2022 was awful in several ways, but if we add it together with the previous two years and divide by three, some might argue it was a fair price to pay. Looking ahead, we’re in a similar position to much of the past few months in that we’re waiting for inflation and economic data to confirm a shift in the forces that pushed rates so abruptly higher this year. There are certainly already signs that shift is at hand. Full Story… 2023 Housing Market Forecast & Predictions.

After being overwhelmed in the housing frenzy of the recent past, homeowners, sellers, buyers, and renters may be underwhelmed in 2023. The slowdown in home sales transactions that began as mortgage rates surged in 2022 is expected to continue, leading to a moderation in home price growth and tipping the housing market balance away from sellers. But with mortgage rates continuing to climb as the Fed navigates the economy to a soft-ish landing, a moderation in home price growth will not be enough for the housing market to be a buyer’s bonanza. Instead, home shoppers will enjoy advantages such as a growing number of homes for sale, but costs will remain high, challenging affordability at a time when overall budgets continue to be squeezed. If home shoppers and sellers have unrealistic expectations, they could find themselves in a stalemate in the year ahead. With two months of data remaining, we expect existing home sales to total roughly 5.3 million in 2022, a 13.8% decline from 2021. The deceleration in home sales is likely to continue as high home prices and mortgage rates limit the pool of eligible home buyers. We anticipate that existing home sales will decline another 14.1% in 2023, registering an annual total of 4.5 million. The major question on the minds of homeowners and aspiring buyers alike is what will happen to home prices. Soaring prices were propelled by all-time low mortgage rates which are a thing of the past. As a result, home price growth is expected to continue slowing, dipping below its pre-pandemic average to 5.4% for 2023, as a whole. Full Story…

Originally compiled & posted by Jason Waugh on the Berkshire Hathaway HomeServices Northwest Real Estate company blog.

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Mitch Darby

I am a real estate broker, architect (both licensed in the State of Oregon), and life-long Oregonian. If you are looking to buy or sell, I can help! I have Northwest Knowledge and am proud to be associated with Berkshire Hathaway HomeServices - Real Estate's Forever Brand!

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