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WHAT TO EXPECT FROM THE HOUSING MARKET IN 2023

Rick Cunningham • Dec 20, 2022

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):


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 Bankrate, explains:



“. . . 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.:


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. Let’s connect.

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EMBRACE THE SEASON: INSPIRATION FOR A VIBRANT SPRING

By Rick Cunningham • 08 Apr, 2024
As Earth Day approaches, it’s the perfect opportunity for us to embrace the spirit of eco-friendly living right in our backyards. In a city known for its sunshine and unique climate, sustainable gardening can be a rewarding way to contribute to environmental health. Let’s explore how you can turn your Los Angeles garden into a flourishing, sustainable oasis. The Basics of Sustainable Gardening Sustainable gardening is about creating a garden that lives in harmony with the local environment. Due to L.A.’s Mediterranean climate, it’s important to choose gardening practices that conserve water and support native wildlife. Whether you have a spacious yard or a cozy balcony, every green space can become an eco-friendly haven. Choosing the Right Plants In Los Angeles, the key to a sustainable garden is selecting native and drought-tolerant plants. Native plants such as the California Poppy, Matilija Poppy, and various types of sage not only require less water but also provide essential habitats for local pollinators. Consider incorporating plants like Lavender, Salvia, and California Lilac, which thrive in L.A.’s climate while adding beauty and biodiversity to your garden. Water Conservation Techniques Water is a precious resource in Los Angeles. Implementing water-wise practices is essential for a sustainable garden. Drip irrigation systems and soaker hoses are efficient ways to water plants, minimizing waste. Also, consider installing rain barrels to collect and reuse rainwater for your garden. Organic Gardening Practices Embrace organic gardening by avoiding chemical pesticides and fertilizers. Composting kitchen scraps and yard waste not only reduces landfill waste but also enriches your soil naturally. In L.A., composting can be a year-round activity due to the mild climate. Natural Pest Control In an L.A. garden, natural pest control means encouraging beneficial insects and birds that keep harmful pests in check. Planting a variety of species creates a balanced ecosystem where nature manages itself. For example, attracting ladybugs can help control aphid populations naturally. Upcycling and Creative Use of Space Los Angeles’s diverse culture is reflected in its creative use of space. Upcycling old furniture or containers into planters not only adds character to your garden but also aligns with sustainable principles. Utilize vertical spaces like walls or fences for gardening to maximize your area. Community Involvement This area is home to numerous community gardens and environmental initiatives. Engaging with local community gardens can be a great way to learn and share sustainable gardening practices. Participate in local plant swaps or workshops to deepen your knowledge and connect with fellow garden enthusiasts. Conclusion: Making a Difference in L.A. Starting a sustainable garden in Los Angeles this Earth Day is more than just a hobby; it’s a step towards a greener, more resilient community. Embrace these practices and watch your garden transform into a vibrant, eco-friendly ecosystem, right in the heart of the city.

SPRING EVENTS

By Rick Cunningham • 05 Apr, 2024
LASAN's Earth Day LA 2024 April 20, 2024 https://allevents.in/los%20angeles/lasans-earth-day-la-2024/10000857119115347 LASAN's Earth Day LA 2024 is a community event organized by the Los Angeles Sanitation & Environment department to raise awareness about environmental issues and promote sustainability through workshops, exhibits, and interactive activities, encouraging residents to participate in eco-friendly practices and support conservation efforts in the city. Bob Barker Day April 21, 2024 https://bobbakerday.com/ Bob Baker Day celebrates the legacy of the renowned puppeteer Bob Baker with a day of puppet shows, live performances, workshops, and family-friendly activities, honoring his contributions to the arts and preserving puppetry as a cherished cultural tradition in Los Angeles. Festival of Books April 20-21, 2024 https://events.latimes.com/festivalofbooks/ The Los Angeles Times Festival of Books is an annual literary extravaganza featuring author panels, book signings, storytelling sessions, and a bustling marketplace with exhibitors showcasing a diverse array of books and literary merchandise, offering book lovers of all ages an immersive celebration of literature and storytelling in the heart of Los Angeles.

THE RISK OF OVERPRICING YOUR HOME

By Rick Cunningham • 05 Apr, 2024
Spring has sprung, and it's not just the flowers popping up – it's the "For Sale" signs too! If you're thinking of selling your house, you're in luck. We're riding the waves of a seller's market, thanks to a lean supply of homes. And let's not forget, spring is when buyers come out of hibernation, eager to find their perfect nest. So, slapping a "For Sale" sign on your lawn? Exciting times ahead! Pricing: The Make or Break Factor But here's the catch – while the market's in your favor, setting your asking price is like walking a tightrope. Aim too high, and you might just lose your balance. Why? Because a sky-high price tag could end up costing you more in the long run. Think of your asking price as your home’s first handshake with potential buyers. It’s that crucial first impression, along with those snazzy photos you’ve got lined up. Price it too steep, and you might as well be saying, “Thanks, but no thanks” to interested buyers. As U.S. News Real Estate points out, “Even in a hot market where there are more buyers than houses available for sale, buyers aren’t going to pay attention to a home with an inflated asking price.” Let’s face it, nobody wants to overpay. Today’s buyers are already feeling the squeeze from rising home prices and mortgage rates. An overpriced home? That's just going to send them walking, probably without even peeking through your front door. And if they sense it's too pricey, expect crickets instead of offers. Here’s the real kicker: if your house sits on the market too long because of an inflated price, people start to wonder. What’s wrong with it? Forbes explains that the longer a house lingers unsold, the more buyers start to get suspicious, even if there’s nothing actually wrong. It’s human nature, after all. Lean on Your Agent for the Golden Price Tag So, what's the game plan? Pricing your home at, or a smidge under, market value is the sweet spot. But how do you find that magic number? That's where a pro comes in. A real estate agent has the know-how to sift through market data and nail down a price that hits the bullseye. Your agent will consider your home's condition, any upgrades you've jazzed it up with, and how similar homes in your area are faring. This isn’t a guessing game; it’s strategy. The right price can bring a flock of buyers to your doorstep and even spark a bidding war. And let’s not forget, homes priced just right don’t tend to overstay their welcome on the market. The Takeaway Selling your home is about making a smart move, not just a bold one. Sure, you want to make a pretty penny on the sale, but overpricing? That's a strategy that can backfire big time. Connect with our team and we can help you strike that perfect balance. You want a price that's like a magnet for buyers – attracting and holding their attention. That way, you’re not just listing your home; you’re setting it up for a successful sale.
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