New Year...New Expectations

By
Real Estate Agent with Keller Williams Evolution - 447 Boston Street, Suite #5, Topsfield, MA 92593-B

It's a new year, so, we've been seeing a new set of predictions or expectations for 2023. My expectations for 2023 are simple and accurate. 

Expectation #1 - People will sell their homes and other real estate.

Expectation #2 - People will purchase real estate.

Expectation #3 = People will still need the services of Real Estate professionals.

Now, others with far more data than I, have provided their thoughts for the housing market in 2023. I such organization's thoughts are below.

What To Expect from the Housing Market in 2023

What To Expect from the Housing Market in 2023

The 2022 housing market has been defined by two key things: inflation and rapidly rising mortgage rates. And in many ways, it’s put the market into a reset position.

As the Federal Reserve (the Fed) made moves this year to try to lower inflation, mortgage rates more than doubled – something that’s never happened before in a calendar year. This had a cascading impact on buyer activity, the balance between supply and demand, and ultimately home prices. And as all those things changed, some buyers and sellers put their plans on hold and decided to wait until the market felt a bit more predictable.

But what does that mean for next year? What everyone really wants is more stability in the market in 2023. For that to happen we’ll need to see the Fed bring inflation down even more and keep it there. Here’s what housing market experts say we can expect next year.

What’s Ahead for Mortgage Rates in 2023?

Moving forward, experts agree it’s still going to be all about inflation. If inflation is high, mortgage rates will be as well. But if inflation continues to fall, mortgage rates will likely respond. While there may be early signs inflation is easing as we round out this year, we’re not out of the woods just yet. Inflation is still something to watch in 2023.

Right now, experts are factoring all of this into their mortgage rate forecasts for next year. And if we average those forecasts together, experts say we can expect rates to stabilize a bit more in 2023. Whether that’s between 5.5% and 6.5%, it’s hard for experts to say exactly where they’ll land. But based on the average of their projections, a more predictable rate is likely ahead (see chart below):

What To Expect from the Housing Market in 2023 | Keeping Current Matters

That means, we’ll start the year out about where we are right now. But we could see rates tick down if inflation continues to drop. As Greg McBride, Chief Financial Analyst at Bankrateexplains:

“. . . mortgage rates could pull back meaningfully next year if inflation pressures ease.

In the meantime, expect some volatility as rates will likely fluctuate in the weeks ahead. If we see inflation come back under control, that would be good news for the housing market.

What Will Happen to Home Prices Next Year?

Homes prices will always be defined by supply and demand. The more buyers and fewer homes there are on the market, the more home prices will rise. And that’s exactly what we saw during the pandemic.

But this year, things changed. We’ve seen home prices moderate and housing supply grow as buyer demand pulled back due to higher mortgage rates. The level of moderation has varied by local area – with the biggest changes happening in overheated markets. But do experts think that will continue?

The graph below shows the latest home price forecasts for 2023. As the different colored bars indicate, some experts are saying home prices will appreciate next year, and others are saying home prices will come down. But again, if we take the average of all the forecasts (shown in green), we can get a feel for what 2023 may hold.

What To Expect from the Housing Market in 2023 | Keeping Current Matters

The truth is probably somewhere in the middle. That means nationally, we’ll likely see relatively flat or neutral appreciation in 2023. As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says:

After a big boom over the past two years, there will essentially be no change nationally . . . Half of the country may experience small price gains, while the other half may see slight price declines.”

Bottom Line

The 2023 housing market is going to be defined by mortgage rates, and rates will be determined by what happens with inflation. The best way to keep a pulse on what experts are projecting for next year is to lean on a trusted real estate advisor.

Thank you KCM for compiling this information

Posted by

Grace be with you, and peace, from God our Father, and the Lord Jesus Christ.

2 Thessalonians 1:2 KJV

Keller Williams Realty Evolution

447 Newburyport Turnpike Suite #5

Topsfield, MA 01983

 978-887-3995  ~ Office
 978-270-3037  ~ Cell
 DougDawes@KW.com

Comments (20)

Michael Jacobs
Pasadena, CA
Pasadena And Southern California 818.516.4393

Hello Doug - some people will move this year.  And there will be those who won't.  And don't.  Kinda like any year. 

Since I entered real estate, there seems to be a repetitive process to the industry.  Before too.  Likely it will continue. In fact, it has.  Of course, the predictions and forecasts never cease either.  

Jan 06, 2023 11:29 AM
Kathy Streib
Cypress, TX
Home Stager/Redesign

Hi Doug- people want to know what's ahead in 2023 for the housing market. This is the kind of information they're looking for. 

Jan 06, 2023 06:28 PM
Kat Palmiotti
eXp Commercial, Referral Divison - Kalispell, MT
Helping your Montana dreams take root

As with you, I know homes will sell and people will move. Other than that, we'll see!

Jan 07, 2023 04:47 AM
Doug Dawes
Keller Williams Evolution - 447 Boston Street, Suite #5, Topsfield, MA - Topsfield, MA
Your Personal Realtor®

Good Morning Michael Jacobs I am in agreement with your reply Sometimes thing go through an extreme.

Jan 07, 2023 08:54 AM
Doug Dawes
Keller Williams Evolution - 447 Boston Street, Suite #5, Topsfield, MA - Topsfield, MA
Your Personal Realtor®

Hi Kathy Streib 

Agreed and I was being sarcastic and is why I included the expectations put forth by the folks at KCM =:o)

Jan 07, 2023 08:56 AM
Doug Dawes
Keller Williams Evolution - 447 Boston Street, Suite #5, Topsfield, MA - Topsfield, MA
Your Personal Realtor®

Hello Kat Palmiotti 

Remember the commercial with the weight lifter? "I lift things up...I put them down" With Real Estate it's Markets go up and Markets go down...lol

Jan 07, 2023 08:58 AM
Kat Palmiotti

LOL, yes, I remember that commercial!

Jan 07, 2023 02:01 PM
Kimo Jarrett
Cyber Properties - Huntington Beach, CA
Pro Lifestyle Solutions

I'm not as optimistic about our economy as you are and I hope you're right and i'm wrong. however, you're right about the buying and selling of real estate regardless of the economy, just not as much volume. 

Jan 07, 2023 10:32 AM
Jan Green - Scottsdale, AZ
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

I'm optimistic about 2023.  The DOW went up 500 points just yesterday and several postiive factors are in place.  Gas prices are down, consumer confidence is rising.   

https://seekingalpha.com/news/3919438-consumer-confidence-jumps-up-in-december

Jan 07, 2023 10:56 AM
Doug Dawes
Keller Williams Evolution - 447 Boston Street, Suite #5, Topsfield, MA - Topsfield, MA
Your Personal Realtor®

Hello Kimo Jarrett 

We still have a supply issue in my area but combined interest rates and soaring prices have slowed the market somewhat. 

Jan 07, 2023 02:02 PM
Doug Dawes
Keller Williams Evolution - 447 Boston Street, Suite #5, Topsfield, MA - Topsfield, MA
Your Personal Realtor®

Hi Jan Green - Scottsdale, AZ 

The economy will determine what people decide to do with Real Estate. Will the market be as we've experienced the last couple of years? I don't think so BUT people will still buy and sell real estate. Also depends on the area of the country

Jan 07, 2023 02:05 PM
Roy Kelley
Retired - Gaithersburg, MD

This is a good report to share.

Have a very productive January and make this your best ever year.

Jan 08, 2023 05:28 AM
Doug Dawes
Keller Williams Evolution - 447 Boston Street, Suite #5, Topsfield, MA - Topsfield, MA
Your Personal Realtor®

Thank you Roy Kelley I will give it my best effort

Jan 08, 2023 03:31 PM
Leanne Smith
Dirt Road Real Estate - Golden Valley, AZ
The Grit and Gratitude Agent

Even when interest rates were double digits during a past administration, homes were still bought and sold. New homes were still built.

Jan 09, 2023 04:28 AM
Doug Dawes
Keller Williams Evolution - 447 Boston Street, Suite #5, Topsfield, MA - Topsfield, MA
Your Personal Realtor®

Good Morning Leanne Smith When Pam & I bought our home we paid 13% interest then refinanced when interest rates dropped

Jan 09, 2023 05:54 AM
Leanne Smith

I bought my first home at 13.8% due to special financing offered through the State of IN. Conventional mortgages at that time were 18%. After we were married, my husband and I refinanced down to I believe in the range of 6%.

Jan 09, 2023 06:35 AM
Mary Hutchison, SRES, ABR
Better Homes and Gardens Real Estate-Kansas City Homes - Kansas City, MO
Experienced Agent in Kansas City Metro area

Oh it's fun predicting the future!!  Now that buyers have gotten over the "shock" of those high interest rates that doubled in several weeks--they seem to be pulling back and taking a closer look at what's affordable. I don't think house prices will crash; I am hoping we get some interest rate drop in the spring.  

Jan 09, 2023 08:17 AM
Diana Dahlberg
1 Month Realty - Pleasant Prairie, WI
Real Estate in Kenosha, WI since 1994 262-308-3563

I love reading all the different predictions about our future!  2023 will be what it is, and what a year it will be to remember at the close of 2023 ... No one really knows the details but we have small glimpses if we are paying attention to all the signs around us.  I will continue to work hard and serve my clients as I would want to be treated!  For me?  That will be my prediction.

Jan 12, 2023 01:49 PM
Lanre-"THE REAL ESTATE FARMER" Folayan
Samson Properties - Bowie, MD
I don't make promises.I deliver results.SOLD HOMES

KCM-Keeping Current Matters is like a Real Estate Economist. Very detail. If interest rates are going to fall I don't see it falling under 5.4%. But we are sure not going to see a 3% interest rate that we saw in January 2022 no time soon.

 

That's just my opinion.

Feb 02, 2023 11:36 AM
Doug Dawes
Keller Williams Evolution - 447 Boston Street, Suite #5, Topsfield, MA - Topsfield, MA
Your Personal Realtor®

Mary Hutchison, SRES, ABR 

I was just reviewing my blog roll and saw I didn't acknowledge your comment. I'm hoping interest rates decline but I think the Fed has other thoughts

Feb 10, 2023 07:07 AM
Doug Dawes
Keller Williams Evolution - 447 Boston Street, Suite #5, Topsfield, MA - Topsfield, MA
Your Personal Realtor®

Hi Diana Dahlberg 

I was just reviewing my blog roll and saw I didn't acknowledge your comment.

I agree, it should be an interesting year. 

Feb 10, 2023 07:09 AM
Diana Dahlberg

So far, so good!  Thanks for getting back with me.  I appreciate you taking the time!  Wishing us both a very interesting 2023!

Feb 10, 2023 02:35 PM
Doug Dawes
Keller Williams Evolution - 447 Boston Street, Suite #5, Topsfield, MA - Topsfield, MA
Your Personal Realtor®

Hi Lanre-"THE REAL ESTATE FARMER" Folayan 

I was just reviewing my blog roll and saw I didn't acknowledge your comment.

LOL...the days of 3% or below are most likely over. We'll have to see what the Fed does

Feb 10, 2023 07:10 AM