After seeing the volatility of the real estate market at the end of last year, a lot of people were left wondering what is going to happen in 2023. Luckily, the market is leveling out and we should see a relatively healthy market throughout this year. Let’s break down what you should expect to see based on the statistics.
Looking back at 2022
After going through all of the 2022 stats, I pulled out some big indicators that really show what happened last year. First off, we are down 27% with the number of sales we saw year over year. It’s important to remember that 2021 was a very hot year in terms of sales and this 27% number is more so the market leveling back out. In the first half of 2022 we were still seeing a lot of sales but when interest rates literally doubled in the third and fourth quarter, affordability decreased by 33% which slowed the market down significantly.
In the first half of 2022 we saw values increase 10% but in the second half of the year, values leveled back out. Even with this volatility in the market, we still ended the year up about 1% when it comes to values.
How could we end the year with values still up? It comes down to inventory levels which went up about 66%. Again, this sounds drastic but we are comparing numbers to 2021 which was an outlier year in terms of the real estate market. Our inventory right now is at a 1.4 months supply of inventory which actually indicates we are still in a sellers market and will continue to be in one as long as inventory levels don’t surpass about a 3 month supply.
What will happen in 2023?
Now let’s jump into my predictions for 2023! First and foremost, we will probably see a similar amount of sales as last year but it will likely be spread more evenly between the 12 month period. We should also see buyers re-enter the market. We saw a horrible fourth quarter because buyers were still adjusting to the new norm and it took some time for people to get comfortable with the hike in interest rates. Based on what the Fed is saying, interest rates will probably stay at about 5.5% and 6% throughout 2023.
I predict that home values will increase this year. I don’t think it will be anything like we have seen in the last few years but we should see a more healthy, normalized market with minor value increases.
Buyers – you have to get off the fence! So many people are talking about waiting for the market to adjust before continuing their home search. Well.. the market has adjusted! We saw 10% decrease in values last year and we do not have enough inventory out there to continue to affect our market values in a substantial way. In other words, that window that a lot of folks have been waiting for is here. For all my buyers out there, you got to get in the market, start looking at properties, and get pre-approved to see what you can afford. We can help you every step of the way so please reach out to us if you have any questions!
For all my sellers out there – we are no longer in the days where you can just list your property and sell it for a high price with little effort. If you want to sell your home for the highest price point possible, it’s all about preparing the property to show well and stand out. Fresh paint, new carpet, and staging can make a huge difference in the price point that you are able to sell for. The good news is we can help you with all of this. We will coordinate any work that needs to be done and can even front the capital needed to do so! This is all done with zero interest and just comes out of the proceeds at escrow. If you want to learn more about this, reach out to anyone here on the True Local team for more information.
If you would like a FREE strategy call with me, please reach out. I love helping people through these tough decisions.
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