Looking back on 2022 and what’s ahead for 2023?

Real Estate Broker/Owner with Turn Key Real Estate 31RA0874656

Well, it was an amazing moment in time, if you bought when rates were considerably lower in 2021 and in the beginning of this year.

However, if you waited too long for whatever reason, you paid considerably more per month. Locally on Long Island, where housing is more expensive, you paid a lot more as home prices had escalated to the highest point in history.

According to the New York State Association of Realtors report, record median sale prices were set in Suffolk County at $559,500, which was an increase of 10.7% year over year through November. In Nassau County, they were even higher at $720,000, which was an 11.9% year-over-year increase.

It was obvious that with the insane demand from all those waiting online at open houses and the bidding wars that ensued, the prices went through the roof, way beyond what would be considered normal.

For those who could afford to buy, you were fortunate, and congratulations. However, there were many who became locked out due to the much higher interest rates and/or the losses in the stock market that would have fueled their purchase.

Then there were those who were able to find a rental if they were lucky and locked in a 2-year lease and then there were those who were forced to pay considerably more as rental prices skyrocketed.

Inventory in One Key MLS as of the end of November was still very low (11,565 1-4 family homes, condos, and coops for sale according to One Key MLS. Inflation is still historically high, but really higher, when factoring in energy and food, affordability for housing has become unreachable for many more families and individuals.

However, prices have still been increasing, but at a much slower pace, due to a lack of inventory and high-interest rates. Moreover, sales have been slowing and declining over the last few months due to the latter reasons too.

However, if you price your home correctly with the most recent comparables the demand is still there to purchase.

Looking ahead to 2023, home prices will slow further. Depending on what our recession outlook will be will determine how slow the sales will be. We just may be heading into a bit more of a buyer’s market, if sales continue to slow.

It is projected that interest rates will continue to rise by another ½% in March. So it might be a prudent time to begin or continue to search for a home and lock in current rates. Also, depending on the job loss data leading to higher unemployment that will be occurring, and whether or not we will have slower growth, or a more severe recession, this will have an adverse effect on the housing industry.

As long as available inventory is low with higher interest rates, sales will continue to decrease. Long Island has a strong economy, but predicting what will happen is a difficult task and no one can be precise in their expectations and the end results.

From April 1, 2020-July 1, 2021 New York lost 319,020 people according to the U.S. Census Bureau population estimates. It continues to lose more families and individuals than are moving in, than any other state, due to the cost of living, taxes, employment opportunities, expensive rents, etc.

Market Watch has an informative article that expands further on the problem, https://www.marketwatch.com/story/no-more-new-york-people-are-trying-to-flee-the-empire-state-for-warmer-destinations-no-thanks-to-higher-rents-and-cost-of-living-11663097876

Those that are in charge must continue to anticipate what negative issues will be coming down the pike as the exodus of people continues in 2023 and its effect on our housing market. We must ponder and come up with solutions to stem the tide of our population loss otherwise our business environment will erode further and so will home prices.
I want to wish all my readers a healthy, happy and enjoyable, and more lucrative New Year in 2023.

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Comments (3)

George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Philip A. Raices what the market will do is a guessing game, but what is not a guessing game is that interest rates will continue to go up until inflation is under control.  And that is not about to happen anytime soon.

Jan 03, 2023 03:35 PM
Philip A. Raices

GM George,

1st Healthy and Happy to you and a more Lucrative 2023!

I think there are several schools of thought that I have researched. Some believe that the Fed will not raise rates anymore as inflation is slowly coming down.  Some believe another 1/2% increase will occur in March to continue holding down the economy until Jerome Powell feels strongly enough to feel inflation is in check, so he'll pivot with w/lowering rates; as more layoffs will show up in our economy over the next 3-6 months (Amazon doubled the number of employees from 800K-1.6 million and only laid off around 10,000+ and since sales are down, less money to spend,why would they need all those excess employees?).  Then there are those that aren't really sure what the future holds as the same holds true in the stock market.  However, there are some gurus, such as Peter Schiff, and others who feel the stock market will continue to go lower, and home prices will also decrease further in many segments of the U.S. (He did predict the downfall of Bitcoin and FTX). There may be a bubble in prices but surely not in our inventory on Long Island and other areas.  Our last implosion in 2008 was because of excessive inventory (10+ months in my area!).  Currently, we have only 3.2 months.  Real Estate is a local business and what happens in my area many times is different is differrent in another area.  If interest rates come down into the 5s I think our industry will have a much more lucrative year.  Time will tell and we'll hope for the best. 

Jan 04, 2023 08:55 AM
Endre Barath, Jr.
Berkshire Hathaway HomeServices California Properties - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Phillip just wanted to stop in and wish you a Happy and prosperous 2023 and see if this year you will interact with your sphere of influence,Endre

Jan 03, 2023 10:33 PM
Philip A. Raices
Turn Key Real Estate - Great Neck, NY
1 of the Most Knowledgeable Brokers on the Net!

Hi Endre,

I have been interacting with my sphere all along, but possibly will be doing more of this, but how much is too much?  I pen a weekly real estate/business column, that many of my current and former clients read, also do a monthly digital newsletter as well as a bi-monthly  "American Lifestyle" magazine.  Trying to balance too much contact w/just the right amount is always a challenge as some will appreciate more information but others will want less.  What I need to do is jump on Active Rain weekly calls. Your thoughts and comments?

Jan 04, 2023 08:38 AM
Philip A. Raices

Also, Happy and Healthy to you too!

Jan 04, 2023 08:41 AM