2022 was a complete about face in the Real Estate Industry going from a Seller’s Market for the last decade to a Buyer’s market in just a few short months. With transactions down 15% nationally this past year, what can Agents expect going into 2023? According to Brian Buffini’s Bold Predictions along with Lawrence Yun from National Association of Realtors, serious agents can expect to survive the first half of 2023 and thrive in the third and fourth quarters. Buffini and Yun discussed the impact of Interest Rates, Median Home Prices and Opportunities for agents in 2023.
Interest rates on 30 year mortgages hit a twenty year high, which saw many buyers retreating due to affordability. Confidence in the Real Estate Market is high, however many people are finding the higher interest rates price them out of buying a home. Although the median income is $50,000 nationally, it takes $85,000 in income to purchase an average starter home, with 35% of salary going towards mortgages.
There is a light at the end of the tunnel on interest rates. It is anticipated that the Feds will increase rates in smaller increments the first half of 2023 yet most experts agree that rates will begin to decline the second half of the year. Perhaps even as low as the 6% range. With interest rates still historically low and continued pressure from rising rent prices, demand people will to move from renting to purchasing homes. In fact, 2/3 of Millennials surveyed stated that they do plan on buying a home in the next few years.
MEDIAN HOME PRICES
With Median Home Prices continually increasing, homeownership is still seen as one of the best investments. U.S. Median Home Prices rose 73% from 2010-2020 with continual gains expected in the next few decades.
In California, Median Home Prices have tripled three times since the late 1970’s with the latest jump from $209,000 in 2009 to $840,000 in 2022. Jordan Levine, VP and Chief Economist for the California Association of Realtors, sites the fact California has a strong economy even after the pandemic and creates a lot of demand on housing.
OPPORTUNITIES IN 2023
After a dramatic decline of 15% in sales for 2022, the forecast for 2023 is a decrease in unit sales of 7% and home prices increasing 10%. Most of that decline is anticipated in the first 2 quarters of the year but primarily in larger cities with higher prices. States and areas that have seen a migration to rural areas can expect gains in 2023 and 2024 forecasts 10% growth in sales overall.
With the tougher markets in 2022 and 2023, there will be 200,000 fewer agents by year-end resulting in less competition for business pros.
What can real estate business pros do in 2023? Buffini recommends three strategies:
1. Understand and educate the changes of the market for Buyers and Sellers.
2. Put the “I” in Investment. Be part of your clients Investment Strategy.
3. Out of state, out of mind. Build your network.
For more information on how to survive and thrive, watch Brian Buffini’s Bold Predictions:
Broker of Record, C21 Hometown Realty