Goodbye 2022 – remembered as a year of housing volatility. Hello, 2023 – likely to be the year of the long-lost normalcy returning to the market.
- If you are wondering if this is good – YES, it is. Normalization is great for stability.
Mortgage rates are expected to stabilize while home sales and prices moderate after recent highs, according to the National Association of Realtors forecast.
Not Increasing as Fast Isn’t the Same as Decreasing
Realtor.com Chief Economist Danielle Hale was upbeat about the prospects of property appreciation, projecting a 5.4% increase in existing-home prices for 2023.
- “We think price growth will be half of what it was in 2022, and we may see some months of year-over-year declines,” Hale said. “But overall, we believe prices will be higher. [Housing] shortage conditions are still going to be present in the market.”
Back to Reality Sellers
The return to normal carries with it many positives, as it offers more options for buyers and more time to make decisions for both buyers and sellers. However, it will take time to reset expectations on both sides, and a period of market acceptance is occurring right now.
- Even with appreciation dropping to 8–10% annually, we still remain higher than the historic norm of 3.8% per year. It’s not a depreciation at all, but a slower appreciation. There is a difference!
More Selection for Buyers Ahead
We are seeing the inventory of existing homes increase and that will provide a little easier path for buyers in 2023. However, lack of new construction, high buyer demand, and sellers aging in place will keep it a seller’s market.
- Cabarrus County continues to see huge demand with relocations and inter-city moves. Currently, 64% of homeowners have an interest rate below 4% and 32% have a rate below 3%. The decision to move will also be filtered through this net of affordability.
So….Are We Headed for a Recession?
Pat Riley, CEO of Allen Tate Realtors says it best. “It will be a recession with a small ‘r’ – short-term and moderate, not like the capital “R” recession that began a four-year downturn in 2007. In a recession, housing is one of the first sectors to slow – and one of the first to rebound,” he added.
The goal of homeownership remains strong, but it may look different than in the past few years. Having a real estate professional interpret the data is key, as the chatter on the news can drown out what is actually happening.
- And remember, real estate is a local business. National numbers do not always reflect what’s going on in your backyard.
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