Moving in 2023? 5 Things You Need to Know

David Treece, MBA, AIF®, CLTC® |
Categories
Real Estate
Financial Planning

What You Need to Know

  1. 2022 was a year of a shifting residential real estate market courtesy of higher interest rates.
     
  2. Expectations are for a more normalized market in 2023 with fewer transactions and mortgage interest rates close to current levels.
     
  3. Inventories are projected to rise as the year goes on, and would-be sellers may want to consider acting sooner rather than later.
     
  4. For single-family buyers, low inventories are set to potentially increase in the weeks and months ahead.
     
  5. A financial advisor can offer valuable guidance during your real estate journey.

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2022 featured a changing environment in most real estate markets across the nation. 2023 looks to hold some similar characteristics to last year, but with some key differences. 

Here's what prospective buyers and sellers should know ...

If You’re Looking to Buy

Overall, normalcy could return across many major markets, with moderating pricing and fewer transactions. Here are some specifics: 

  • Pricing may rise from present levels but at a slower pace than in previous years. According to Realtor.com, expectations are for overall price increases of 5.4% year-over-year. 
  • In addition, the National Association of Realtors predicts that inventories may rise from 2022 levels, potentially making buyer selection more favorable than last year. 
  • Existing home sales are projected to decline further in 2023 to 4.78 million sales across the nation versus 5.13 million in 2022. A smaller amount of transactions could be favorable for buyers, with sellers offering better terms to complete transactions.
  • If you are a renter, expect rent prices to remain firm and even elevated from present levels in 2023, as housing shortages persist in many markets.
  • Mortgage rates should remain near present levels–perhaps slightly higher or lower, with many experts predicting 30-year fixed rates projected to be in a 6 - 7% range in 2023.

If You’re Looking to Sell

  • The consensus theme so far for 2023 is to expect normalcy in most residential real estate markets featuring price moderation and fewer transactions. Proper pricing based on comparables and attractive terms will be key to attracting buyers and closing transactions.
  • 2023 should still be a fluid market for sellers, as inventories remain low presently. That said, inventory levels could rise later in the year, according to the National Association of Realtors.
  • Buyers will likely seek value and terms such as closing cost assistance and smaller down payments, especially first-time homebuyers financing via FHA loans.
  • Expectations are for most markets to sway to favor buyers as the year goes on, with mortgage interest rates impacting affordability.
  • As always, and perhaps more prevalently in 2023, market conditions will be highly localized, with the supply and demand picture varying from region to region. 
  • Affordable housing will remain a key theme, so the potential for growth in lower-priced locales exists, perhaps more so than in higher-ticket areas.

Housing Affordability & Multifamily

A quick note on affordability. Now, more than ever, there seems to be a trend toward multi-family homes for seasoned individual buyers and even first-time home buyers. It’s a wise trend, as it can help build equity and wealth over time while lowering monthly out-of-pocket expenses. 

Depending on a variety of factors, it could be worth consideration. This is especially true given that many commercial multi-family ventures are heading to the sidelines amid higher interest rates; this could give individual buyers an opportunity.

Multi-family values have held more firmly versus their single-family counterparts, as rents have remained elevated in most markets.

I am always here to offer guidance during your real estate journey, I’d be happy to do just that. Give me a call at 305-751-8855 and let’s talk.