In an article published on December 19th, 2022 by senior contributor Brenda Richardson, Forbes features what some Real Estate experts predict for the Real Estate Market in 2023.
The one thing that everyone agrees on is that historically low rates and the buying frenzy of the last two years have come to an end.
Read what the experts have to say:
Danielle Hale, Realtor.com chief economist: After several years of an unambiguous sellers’ market, the 2023 housing market could feel more like a nobody’s market. We expect to see some buyer advantages in the form of 22.8% more homes for sale, however, the increase will result largely from homes taking longer to sell amid challenging affordability conditions. For-sale homes will remain high-priced, with the national annual median price for 2023 expected to advance another 5.4%—less than half the pace observed in 2022. Still high prices mean that homeowners are likely to walk away from a home sale with significant equity, if they decide to venture into the market and can find a buyer. On the whole, however, we expect home sales to be dramatically lower, down 14.1% compared to 2022 as both buyers and sellers pull back from a housing market and economy in transition.
Bob Pinnegar, president and chief executive officer of the National Apartment Association: Pursuing sustainable and responsible solutions to address our nation’s housing affordability crisis will remain a steadfast priority in the new year. Our nation’s affordability challenges stem from an alarming supply/demand imbalance, and to properly address this we must build 4.3 million new apartments by 2035.
On the economic side, supply chain issues have begun to ease and will hopefully continue to in the year ahead. While jobs are steady, the labor market faces challenges in areas like construction, where workers are needed. Inflation is starting to show signs of easing, but any of those impacts are unlikely to be seen until the end of 2023.
Nick Bailey, president and CEO of RE/MAX, LLC: One thing I can say for certain about the housing market in 2023 is that no matter the macro-economic conditions, Americans will continue to buy and sell millions of homes. Generally speaking, when we’re talking about the overall health of the housing market, most people are approaching that conversation from the lens of an investor. Will the market bottom out or have we hit the top? That’s an important conversation, but the truth is, people are getting married, divorced, moving to care for aging family members, relocating for career opportunities and so on, every single day. And for those people, it’s less about the interest rate or mortgage rates that week and more about their present situation and whether they can afford a house that fits their needs.
Jacob Channel, senior economist for LendingTree: The housing market will remain tough for many would-be buyers. While mortgage rates might stabilize, prices could decline, and buyers may be able to negotiate with sellers more in 2023 than they were able to over the height of the pandemic, that doesn’t mean that buying a home is suddenly going to become a walk in the park. On the contrary, affordability challenges will likely persist for many, owing to rates remaining steep and supply remaining limited. Borrowers shouldn’t expect rates to fall to anywhere near their record 2021 lows, or even to as low as they were at the start of 2022. Home prices won’t necessarily fall everywhere, but a combination of relatively high rates and weak home buyer demand will probably push prices down nationwide this year.
Lawrence Yun, chief economist for the National Association of Realtors and senior vice president of research: 4.78 million existing homes will be sold, prices will remain stable. Home sales will decline by 6.8% compared to 2022 (5.13 million) and the median home price will reach $385,800 – an increase of just 0.3% from this year ($384,500). Half of the country may experience small price gains, while the other half may see slight price declines.
Kate Wood, home expert at NerdWallet: After three years of a wildly unbalanced housing market, it’s tempting to hope 2023 will at last bring normalization. But the market remains far from normal, even if it’s no longer going to extremes. Rates have fallen from the peaks of October and November, but with continued upward pressure from the Federal Reserve the lows we’re seeing now could just be the eye of the hurricane. And major economic or geopolitical changes could, as they did this past year, totally upend rate forecasts. Home prices will likely continue dropping next year, but this won’t be a bubble bursting. These price drops will be more like a balloon slowly deflating — no longer headed skyward, but still hovering out of reach for many.
Thad Wong, co-CEO of Christie’s International Real Estate and @properties: 2023 will be a significantly better market than what many experts are predicting. There will be some price retraction off the record highs of early 2022, but generally, the next three to five years will be stable, fluid and relatively uneventful — which is exactly what the industry needs, after the last three years. There is an interesting dynamic now between inventory, interest rates and pricing. Inventory needs to stay low enough long enough for rates to ease back down, and I believe that low inventory levels will continue throughout 2023, which will put a floor under pricing. As interest rates move down, we’ll see affordability improve, demand pick up and healthier levels of inventory return.