What does 2023 promise for real estate across America? It’s probably the biggest question for buyers and sellers alike.
Gazing into the property crystal ball is a notoriously risky business: no one predicted the two-year double-digit growth in property prices that began at the start of the pandemic. Many pundits and agents thought prices would go in the opposite direction.
Also, we seem to be getting on top of the inflation fight. With the December inflation number coming in at 6.5% (down from 7.1%) the Federal Reserve may ease back on interest rate hikes later this year.
As an experienced agent in our neighborhood, I’d counsel every potential buyer and seller to take note of our national trends and predictions but be more concerned about local market sentiment.
Talking to agents is the best way to learn about neighborhood price trends and property availability. The forecasts I’m sharing from the National Association of Realtors will give you sound background knowledge.
Always remember that America is not one colossal property market but made up of tens of thousands of smaller ones, where buyer behavior and price performance can vary enormously.
So, looking at the NAR forecast for 2023, here are its most essential predictions:
- Prices will stabilize after 21 months of double-digit value growth.
- Nationally, prices might edge 0.3% higher, significantly slower than the average 9.6% gain recorded last year.
- The average property value will be $385,000.
- California will pull down the average price gain. San Francisco, which has enjoyed stellar value growth for years, is predicted to drop back 10% to 15%. If the tech sector has a tough year (Microsoft just announced 10,000 layoffs) that prediction doesn’t seem outlandish.
- 4.78m homes to be sold, which is a 6.8% fall from last year’s 5.13m total. This number does not include new homes.
- Rents to increase by 5%, a rise that would be under the current inflation rate of 6.5%. Rent increases jumped 7% last year.
- Foreclosure rates will be less than 1% of all mortgages, thus remaining historically low.
- NAR’s top 10 cities for value growth of 5%+ is topped by Atlanta, GA.