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Here is the link to my original 2023 PREDICTIONS

In early January we made our top 10 real estate predictions for 2023. So now, with the year a little more than half over, we are going to review and revise that same forecast and see where we actually are.

Original prediction: Sales prices will fall in 2023.

The most significant forecast was that sales prices would fall in 2023 without any sort of systemic decline in values. So far, prices are down by about 12% year over year; however, prices rose by 3.6% from March to April.

Taking into account interest rates remaining in the high 6% range currently we are standing by our original prediction that the median sales price for 2023 will be lower than that of 2022 however we do not anticipate the drop to be as significant as we originally predicted.

Original prediction: Mortgage rates will remain high until the fall.

Our prediction was that mortgage rates would stay above 6% through the fall then dip into the high 5% range. However, given the current state of mortgage rates, it’s very unlikely our original prediction will come true before the end of the year.

We still expect them to drop into the fives, but not until early next year.

Original prediction: No significant increase in inventory.

With months of inventory still well below the amount seen in a balanced market, we maintain our original prediction that there won’t be a significant enough increase in inventory to give an advantage to buyers throughout the rest of 2023.

Expert analysis says there are around 20 million homeowners with mortgage rates around 3% nationwide. Why would they move? “With the share of homes with price reductions dropping and list prices rising again, I just can’t see a buyer’s market appearing this year.”

Housing Market Locked Downed (Are Last Year’s Low Rates the Reason?)

Original prediction: Listing prices will pull back.

Overall, our prediction of a 10-12% decrease in selling price in 2023 has proven to be inaccurate so far. 

Sellers have been able to hold fairly strong this year even in the face of continued high interest rates and recession fears. The biggest contributing factor here has been the lack of inventory. People still have to buy due to job and lifestyle reasons such as growing families. With many people holding onto their homes because they have secured historically low interest rates, the buyers out there are having to compete in a market of deplenished inventory.

Original prediction: Work-from-home trends won’t end.

As predicted, workers aren’t returning to their workplaces in very large numbers with professionals in many industries still working remotely. Despite many companies setting “return-to-office” dates for the first few months of the year, nearly half of all workers are still at home.

Though the share of people working from home did fall to 43% in the second quarter of 2023, down from 49% in the first quarter, the amount of companies with hybrid work arrangements rose 10 percentage points to 30%, indicating that the work-from-home era is far from over.

Original prediction: New home construction will slow.

With new home permits down 21% year over year, and new home starts off by 28%, I think it’s accurate to say that activity in the new construction sector has slowed. Builders continue to be hit by high financing rates as well as high material prices. Builders are also shying away from larger projects with bigger upfront costs and longer sales times on 3-5 years. We’re seeing more small builds of 2—50 homes.

Original prediction: Markets where home prices rose fastest will experience the hardest declines.

Very constricted inventory contributes to well-priced homes receiving multiple offers.

Our forecast about sale prices relative to 2022 high has been accurate in many cities, like Seattle (-18.1%); San Francisco (-22.5%) and Phonies (-12.5%), there are also many cities in the U.S. where prices have already exceeded 2022 highs. Such cities include El Paso, Texas; Sarasota, Florida; Naples, Florida; Savannah, Georgia and Jacksonville, North Carolina.

Original prediction: Affordability will not improve.

This prediction has remained true throughout 2023 mainly due to home prices being out of sync with incomes, as well as financing costs well above the level that buyers had become used to.

We are maintaining our original prediction that affordability won’t change throughout the rest of the year.

Original prediction: Governments will address the housing shortage.

Our final 2023 forecast was that governments at the local, state and national level would begin to address the growing housing shortage in America. This has proven to be true. For example Washington House Bill 1110, The New York Housing Compact, Florida Senate Bill 88, the Make Virginia Home Plan and Montana Governor Greg Gianforte’s housing taskforce are just a few of the legislative actions that have been taken to improve the housing supply.

Quickly glancing ahead to 2024

If rates do finally drop into the high 5% range, I believe this will be a psychological barrier for buyers and we’ll see another run-on homes. (We’ll have a frantic early January-March for buyers). Prices will increase accordingly, and though many sellers have locked in historically low rates, the increase in selling price will convince many to sell and help start to unlock inventory by mid-2024.

Buy Before You Sell Program

Are you consistently losing to cash offers?  Is there a house you just can't live without? Do you want to purchase before you sell? We have a lender who will purchase the home for you as cash and put you in the driver's seat. You will then refinance into the loan after closing which allows you to compete at a different level!


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