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What Will 2023 Look Like for Real Estate?

January 16, 2023

Whether you are a homeowner, an investor, or planning to purchase your very first home, understanding our housing economy trends and predictions will be key to making wise financial decisions in the coming year. I know this industry can be a rollercoaster ride, especially right now, but I’m confident that I can help guide you to your goals.

Cheers to all 2023 has to offer!

Inflation & Mortgage Rates:

Thursday’s CPI report shows inflation cooling, indicating that mortgage rates could continue to fall and increase consumer confidence in the market. Inflation has been dropping over the past six months, and consumers can expect mortgage rates to soon follow, says Lawrence Yun, chief economist for the National Association of REALTORS®. The 30-year fixed-rate mortgage could even drop below 6%, Yun adds.

Freddie Mac reports the following national averages with mortgage rates for the week ending January 12th:

  1. 30-year fixed-rate mortgages: averaged 6.33%, dropping from last week’s 6.48% average. A year ago, 30-year rates averaged 3.45%.

  2. 15-year fixed-rate mortgages: averaged 5.52%, also dropping from last week’s 5.73% average. A year ago, 15-year rates averaged 2.62%.

Buying & Selling:

“We believe 2023 will bring lots of variability in how housing markets adjust,” Bright MLS Chief Economist Lisa Sturtevant said at the National Association of Realtors Annual Real Estate Forecast Summit. “There will be a lot of resetting expectations for both buyers and sellers.”

Low housing inventory will not recover this year. At the current sales pace, inventory is at a 3.3-month supply, according to NAR. New housing starts are predicted to fall by double digits and existing homeowners may continue to wait to list their properties, since many have already locked in lower mortgage rates, creating minimal incentive to sell and buy again until rates are more favorable.

  1. Redfin reports that home buyers nationwide need an average income of $107K to afford a home, up 46% from the same time last year.

  2. A waive of foreclosures is not predicted. Homeowners will not need to panic sell because they have strong credit and the highest nested equity recorded in the past decade.

  3. Opinions are split between modest price growth, no appreciation, or a small downward adjustment this year. This will heavily depend on geographical location, monetary policy and geopolitical uncertainty.

  4. Below is the most recent County Market Updates, but you can Click here to customize to your City’s Monthly Market Report, provided by the California Association of Realtors Updated on the third week of each month with the prior month’s data. All cities available in California.

Investing:

New Western released its 2023 investor survey, which predicts trends in residential real estate investment. The survey shows that investors remain confident in real estate, with Gen Z and Millennial investors driving demand in a growing fix-and-flip market. Here are the report’s key takeaways:

  1. Rent is softening and becoming more affordable than mortgages, which ensures investors will have a healthy pool of renters in 2023.

  2. Gen Z and Millennial investors see real estate as a secure hedge against inflation.

  3. The exit of iBuyers will create a more favorable market for local investors.

  4. 63% of investors say mortgage rates are not high enough to deter them, and 70% plan to invest in real estate in 2023.

Renting:

  1. People will continue to turn toward renting due to high home prices and the burden of student debt.

  2. Monthly rents are currently less than it costs to own a home.

  3. Across the nation, billions of dollars in institutional capital are flowing into build-to-rent (BTR) communities.

More Real Estate News To Contemplate

  1. 14 great lesser-known ski towns you can afford

  2. Largest mortgage lender in America leaves the biz

  3. Why new construction is a great choice for first-time buyers

  4. Do you have an estate plan in place?

  5. Thinking of adding solar? Do it before April 13th when NEM 3.0 goes into effect

As a specialist in luxury and second homes, including short term rental investments, from the Orange County Coastline to the Palm Springs area, my goal is to bring you accurate and up-to-date housing data. If you have more questions, or want to discuss your next move, I’d love to hear from you.

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