As housing ended 2022 with a whimper, after being on fire for several years, we are all wondering what 2023 will bring? Due to the lack of an accurate crystal ball, I am going to take a shot at a few things that I think may happen this year based upon 30+ years as a real estate attorney and 25 years or so in the mortgage industry. As with the weather people and stock pickers, I will be accepting no responsibility if any or all of the following turn out wrong! So, with that, let's get to it...
Rates. Interest rates will remain in the 5.5-7.25% range for most of 2023. As inflation is tamed and a slowdown in employment helps to possibly send us into a recession, rates will stabilize and then start to decline. If we have a recession, as many predict, at that point they should start to decline further though not to anywhere near the 2020/21 levels.
Prices. Housing prices will hold steady for the first half of the year due to tight inventory. I expect that outside of NYC, prices will decline 5-10% after the buying season when sellers who have been holding on waiting for lower interest rates, finally decide to list their homes or are forced to do so as a result of "life" events."
Inventory. The number of homes on the market will be tight until September. At that point, sellers will accept the new interest rate and pricing parameters and start to list their homes in earnest.
Lending. To increase their rapidly decreasing loan volume, banks and other mortgage lenders will be bringing back some of their riskier products and relaxing their underwriting requirements (though not to 2007 levels).
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