2023 Real Estate Predictions
(Jeff) In this video we will be talking about our predictions for Interest Rates, Prices, Sales & Inventory levels as well as the wild cards to be on the lookout for.
(Jeff:)Hey, it’s Jeff Chubb I am a retired investment banker turned real estate agent that has sold more then a 1,000 homes and am here with
(Sammy) and I am Sammy Illiopoulos, I am one of the top 300 loan officers in the United States and work with Guaranteed Rate.
(Jeff) Let’s start with Interest rates, which are pretty much all your world Sammy. What are your predictions for 2023.
(Sammy) Fannie Mae’s Home Purchase Sentiment Index (HPSI) showed some signs of life in November, posting its first increase in nine months.
(Jeff): Break that down for me… Because I don’t know what any of that means. Why does that matter?
(Sammy) Well the uptick is a good sign for things to come as both consumer homebuying and home-selling sentiment are significantly lower than they were last year, which, in my view, is unsurprising considering mortgage rates have more than doubled and home prices remain elevated. I expect interest rates to be much more stable compared to 2022, in addition to seeing potential drops from time to time. But for now, consumers should continue to expect mortgage rates to rise slowly.
I expect mortgage demand to continue to be curtailed by affordability constraints in 2023 as mortgage application volume in 2022 finished at 26 year low.
(Jeff) Alright, so to recap. Your prediction is that rates are going to remain elevated and we may see some drops from time to time. But basically don’t expect interest rates to be 4% anytime soon.
(Sammy) Ya, I don’t see any chance of that happening in 2023. It doesn’t make sense if the reason you are not buying now is because you think mortgage rates are going down.
(Sammy) Jeff, I think Prices and the Sales and inventory levels are your world. What are your predictions there?
- Believe that they are going to be flat this year
No to very little inventory growth
Sellers not coming to market as buyers step out of market
Believe the Ying & Yang will continue.
(If more buyers come to market, then more sellers will)
Sales will be off of the 2021 and 2022 levels.
These were some of the best years in our history (have graph to show in unit sales)
Believe sales will be back to 2013 / 2014 levels.
Do not believe there will be a cratering in sales
The MA market has gotten through the interest rate shock and don’t see another shock that will really decrease sales to lower levels.
Inventory will continue to increase… But very slowly. It may even look flat when looking at a year over year in the Spring market when we saw a big run up in 2022.
Don’t see any external factors that will cause a surge of inventory… Aside from the economy which I know we will talk about.
Sellers that are comfortable in their 2 to low 3% interest rates are not going anywhere unless interest rates go significantly lower… I am thinking in the low 4s to high 3s.
Just not worth it to them… They will make their current houses work by either continuing to squeeze in there or doing an addition.
I don’t see there being a big surge in distressed properties at this time with our economic standing. This could change if we saw a huge uptick in the unemployment rate.
(Jeff) I mentioned a wild card just a couple moments ago, so let’s talk about some things which could really throw these predictions off. Sammy, what are your thoughts on some?
(Sammy) My three are Job security, Total Income and Inflation
(Jeff) I mean, I was just going to say the economy… It’s the economy stupid! Sounds like we are on the same page. Talk to me about your thoughts on Job Security:
(Sammy) - Well the FED is increasing interest rates specifically to slow down the economy with the goal of increasing the unemployment rate in this country. So if there is not enough job security because of a weaker economy, then people will be less likely to buy a house.
(Jeff) - Yes, I agree. Job security is very important. People having jobs means that they are able to pay their mortgages. People that are paying their mortgages are not the ones getting foreclosed on! And foreclosures create tailspin markets. I couldn’t agree more.
(Jeff) So talk to me about what your thoughts are on Total Income:
(Sammy) I worry that in the last 12 months there has been zero net change in income. This means people may not have enough to upgrade or go to a new home. It is further exasperated with inflation and interest rate increases.
(Jeff) Ya, that one is a double whammy.
(Jeff) You mentioned inflation, let’s talk about it a little more… At the end of the year we got some good news that it seems like it is finally starting to slow. What are your thoughts here?
(Sammy) Inflation is rampant. This will certainly curtail mortgage demand as there is a tremendous amount of pressure from the FED to raise rates continuously. We expect rates however to become less volatile compared to 2022. We are literally over double the avg 30 year fixed rate today.
(Jeff) I think that makes sense. And if inflation doesn’t get under control then that ultimately means the FED is going to continue to hammer away. But even then, it will be interesting to see if the FED really has the stomach for increasing the Federal Funds rate if employment starts getting real bad…
(Jeff) And that is one that I have to add in… The FED. Everyone is expecting the FED to slow down their rate hikes and stop in early 2023. If they don’t and need to continue to cut this economy down further… Then that really plays into your three wild cards.
(Jeff) Well Sammy, I think we did it! There are our predictions for 2023!
(Sammy) Yes. If you are thinking about making a move in Massachusetts, then be sure to reach out to this guy (pointing to Jeff). He is one of the top agents in the state and will take great care of you. I can’t begin to tell you how much experience matters and finding a quality agent will make the difference between a good experience and a miserable one.
(Jeff) And if you are buying a home in MA or really anywhere in the country, then Sammy can help you! He works for the #2 lender in the country and is one of their top 10 brokers in the company. I have worked with a lot of mortgage brokers in the past… You won’t regret reaching out to Sammy.
(Jeff) Our contact info is below, so let us know if you have any questions and until next time!