The 2023 Real Estate Market and YOU: GOOD NEWS!

by The Marketing Mama, Amanda

The largest factor that drove the real estate market in 2022 was the skyrocketing mortgage rates. It was almost as if someone came along and turned off the faucet for how quickly the homes were selling. That someone was actually the Federal Reserve who aimed to slow down inflation with a series of interest rate hikes beginning in March of 2022.

What I mean by the faucet being turned off…for those of you who are in the industry or were in the middle of buying or selling a house, you know that demand as well as appreciation in sales price leveled off. We saw a small correction here in Florida, but by no means did the market take a dive. Instead of availability of homes being the biggest issue, remember the APPLE FOR SALE, homebuyer affordability became a concern.

Here's the good news: yes, those higher rates had us all shook, but as this is my 4^th shift in the real estate market over the past 2 decades in the industry, in my experience, it should ultimately lead to a more stable and balanced real estate market.

But, what can we expect in 2023? Will mortgage rates continue to climb? Could home prices come crashing down? Much like Manny and I discussed in our ARE WE HEADED TO ANOTHER HOUSING MARKET CRASH video, I think we’re going to be ok. But, luckily, there are other industry experts who have some data I’ll share below that can back up our research and opinion. I don’t have a crystal ball, but I’ve got some GOOD NEWS FOR REAL ESTATE!

GOOD NEWS: MORTGAGE RATES WILL FLUCTUATE LESS

In 2022, 30-year fixed mortgage rates surged from roughly 3% in January to around 7%. We’ve never seen rates double in such a short period. Yes, we were SHOOK.

This year, economists forecast a less dramatic shift.

In an interview with Bankrate, Nadia Evangelou, senior economist for the National Association of Realtors, shares her vision of three possible mortgage rate scenarios:¹

Inflation continues to surge, forcing the Fed to repeatedly raise interest rates. In that scenario, she predicts that rates could reach as high as 8.5%.
Inflation decelerates and mortgage rates follow suit, averaging 7 to 7.5% for the year.
Rising interest rates trigger a recession, which could ultimately lead mortgage rates to drop closer to 5% by the end of the year.

Realtor.com forecasts something similar to scenario #2 above: “Mortgage rates will average 7.4% in 2023, trickling down to 7.1% by year’s end.”² The Mortgage Bankers Association, however, projects something closer to Evangelou’s scenario #3, with the 30-year fixed rate declining steadily throughout the year, averaging 6.2% in Q1 and 5.2% by Q4.³

Economists at Fannie Mae fall somewhere in the middle. In a recent press release, they predicted that the U.S. economy will experience a “modest recession” this year.⁴ But in their December Housing Forecast, they project that 30-year fixed mortgage rates will only fall by half a point from an average of 6.5% in Q1 to 6.0% in Q4.⁵

"From our perspective, the good news is that demographics remain favorable for housing, so the sector appears well-positioned to help lead the economy out of what we expect will be a brief recession,” said Fannie Mae Chief Economist Doug Duncan.

WORTH THE RISK? YES! Guys, no one has a crystal ball and as you’ve read, even the experts can’t say for certain where mortgage rates are headed. So, where is your basis for gambling? Real Estate is always a good investment. Instead of trying to ”time the market,” focus instead on buying or selling a home when the time is right for you. At YOUR Home Team Group, we can help show you a variety of mortgage options that are currently available that can make a home purchase more affordable. Don’t forget, within our lending division, HOME TEAM LENDING, we service our own loans, so refinancing when the rates are lower is easier than ever!

GOOD NEWS: INVENTORY WILL CONTINUE TO RISE

I was tired. My buyers were tired. The industry was tired. Going to battle over and over AND OVER again in the home-buying frenzy post 2020, well, it’s a welcome breath of fresh air. I literally feel like I can breathe again!

You’ve probably forgotten, but in a regular real estate market, homes take more than 3 hours to sell. And so you’re going to start seeing listing inventory increase their ADOM (Average Days On Market) and there will be more options because of it.

Economists are predicting total home sales will fall a bit, but rebound right back. Realtor.com Chief Economist Danielle Hale recently said, “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.” She expects this drop in sales to lead to a nearly 23% increase in inventory levels this year, offering more choices for buyers who have struggled to find a home in the past.⁶

However, given the severe lack of housing supply, even with a double-digit increase, the market is expected to remain relatively tight and below pre-pandemic levels. Hale points out: “It’s important to keep historical context in mind. The level of inventory in 2023 is expected to fall roughly 15% short of the 2019 average.”

So, what the heck does that mean for a buyer and/or an agent? If the lack of inventory has been making you crazy and/or frustrated 2023 may bring new opportunities for you to find the perfect home. And today’s buyers have more negotiating power than they’ve had in years. Contact YOUR Home Team to find out what listings that meet your criteria.

And, what the heck does that mean if you’re a seller (or their agent)? Y’all better GET TO IT! More homes on the market means more competition. Because we have Real Estate, Mortgage, and Title all under one roof, we can expertly determine your best course of action and maximize your profits. Feel free to CLICK HERE FOR A FREE HOME VALUATION. And, you can always Text or #CallYourMama 855.4YO.MAMA to schedule a free consultation.

GOOD NEWS: HOME PRICES WILL REMAIN RELATIVELY STABLE

While some economists expect home prices to fall this year, many expect them to remain fairly stable. And, many economists agree with Manny and I that a housing market crash like the one we experienced in 2008 is highly unlikely. The factors that caused home prices to plunge during the Great Recession—specifically crazy lending standards and a surplus of inventory—aren’t a thing anymore.

So, what the heck does that mean if you’re a buyer? Uncertainty, in any capacity is scary, right? But with the changing of the New Year, there is also HOPE. And, one thing that IS FOR CERTAIN: real estate is a long-term investment that has more-often-than-not appreciated over time. Did you know that when the market is “slow,” that’s when it’s the MOST FUN to be a buyer? I’ve helped literally hundreds of families purchase homes and I’m actually kind of excited for buyers in 2023. The key is to discuss your goals and budget with experts that know what they’re doing. Like my team at The Home Team Group. Whether it takes three weeks, three months, or three years….if your goal is homeownership, our goal is to get you there. Get a game plan together with YOUR Home Team.

And, remember, if you’re planning to sell this year, because we have #AllThingsRealEstate under one roof…we have so much more to offer in terms of maximizing your profits. Contact us for recommendations and to find out what your home could sell for in today’s market.

BAD NEWS: RENT PRICES KEEP CLIMBING

According to Jay Parsons, head of economics for rental housing software company RealPage, there’s some evidence of a slowdown in demand. He predicts that market-rate rents will rise just 3.3% this year. At a national level, the forecast for rent growth is 6.3% in the next 12 months, somewhat ahead of home price growth and historical rent trends.”⁷

So, what the heck does that mean if you’re renting? Rent goes up, but you can lock in a set mortgage payment and build long-term wealth by putting that money toward a home purchase instead. Reach out for a free consultation to discuss your options.

GOOD NEWS: WE’RE HERE TO GUIDE YOU

My husband Manny and I, the Co-Founders of The Home Team Group, have been the “Literal & Figurative Marriage Between Lender & Realtor” for over 20 years right here in Central Florida. We have helped literally thousands of people with their real estate goals and have thousands of closed transactions under our belts. We have an incredible team of knowledgeable real estate, mortgage, and title professionals who all believe as we do: when you help people, good things happen.

If you’re looking for experts with a heart of service to help you buy, sell, or refinance in 2023, then look no further. We are YOUR Home Team.

Much love,

Amanda aka The Marketing Mama

The above references an opinion and is for informational purposes only. It is not intended to be financial, legal, or tax advice. Consult the appropriate professionals for advice regarding your individual needs.

Sources:

The 2023 Real Estate Market and YOU: GOOD NEWS!

by The Marketing Mama, Amanda

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