Real Estate market growth in 2023 and onward: Overviews from Entrepreneurs and industry experts

Realtors Talkies
26 min readFeb 8, 2023

The real Estate industry is capital intensive, so don’t get affected by short-term factors. However, a persistent recession or some other factors like Covid19 affect the industry heavily long-term. I interviewed some real estate experts and owners, and their answers might surprise you.

Adriane Stuebs, my broker/owner at RE/MAX Shine

I see the trend to invest in real estate growing since stocks are performing poorly. This is a factor contributing to the lack of inventory, as many investors have plucked single-family homes out of the market to use as rentals both for long-term and short-term rentals like Airbnb and VRBO. This keeps the supply of single-family houses low for buyers, which in turn, keeps prices higher than this market would typically allow for under normal recessive markets. -Adriane Stuebs

Rinal Patel,the founder of suburbrealtor

If you’re thinking of investing in real estate next year, you might be wondering what the real estate market conditions will be in 2023. Before you look for a property to buy, it’s important to know what home buyers, home sellers, real estate agents, and investors should expect from the 2023 real estate market.

By 2023, housing demand will continue to rise and this is because housing demand will most likely come from millennial buyers, most of whom are now in their prime years. It means that most millennials nowadays are now prioritizing homeownership. They are expected to continue to drive the housing market. Also, local economy, interest rates and population growth would also help drive the decade for housing.

Home appreciation rate would be slow in 2023 and this is because while home values will not significantly drop, home prices are slowing down, and they will almost remain relatively constant. Which makes appreciation rates that are expected to be 1%, more or less, depending on the local market.

John Swann, Investor | John Buys Your House

Real estate is always regional, and that will certainly be a factor in 2023. Remote or hybrid work is here to stay and that will continue to influence migration trends within the US. Namely, we are still seeing people move out of large cities to smaller cities or the suburbs/exurbs. There are still migrations of people from California to Arizona, Nevada, Texas, Idaho, etc. and people from the Northeast to the South.

Within Charlotte, I am expecting flat to slight decline (<5%) in home prices over 2023. I think we will see demand continue to drop through the first two quarters of 2023 and plateau as the Federal Reserve provides more clarity on interest rate hikes and inflation. If inflation is not dropping through the first half of 2023, I expect the economic outlook to further sour and the Fed to continue with aggressive rate hikes, which will negatively affect mortgage interest rates, putting more pressure on the real estate market. In that scenario, it’s likely prices drop more than 10% in the Charlotte area.

Cam Dowski, Real Estate Mogul, WeBuyHousesChicago.Co

A large percentage of respondents (66%) anticipate increasing or constant circumstances in the real estate fundamentals of cost of capital, capital availability, property prices, vacancy levels, leasing activity, transaction activity, and rental rates for the upcoming year. According to respondents, leasing activity, declining vacancy rates, and rental price rises offer the most room for improvement.

Usually, among property types for the next 12 to 18 months, downtown businesses and regional offices are considered the most alluring risk-adjusted prospects.

There were significant regional differences: Respondents from Europe name suburban offices as their top growth opportunity (35%), while respondents from Asia-Pacific strongly prefer digital economy assets (43%), and respondents from North America name logistics and warehouse storage spaces as their top choice (43%).

The need for reporting, real estate companies to be permitted to create procedures and understand viewpoint regulatory changes. When more than 45% of survey participants indicated that they were looking for direction or an industry-driven reaction, industry groups can be incredibly beneficial by offering views, data, and suggestions. CRE leaders should verify that paying attention to social and governance concerns in addition to only the “E” in ESG.

Additionally, respondents closely followed developments in tax law. The industry’s top concerns were higher tax rates, modifications to transfer pricing/profit-sharing, and the mechanization for enforcement because tax rules around the world are currently in flux. CRE executives may assist their companies in preparing for anticipated tax changes by:

1. Making reporting and data needs for automatic regulatory enforcement in some jurisdictions more transparent.

2. Considering how ESG measures may affect taxes. Existing or soon-to-be-enacted legislation may offer real estate companies tax advantages, such as tax credits, for qualified operations

Alex Byder, owner of BD Home Holdings, LLC

There are two major clashing trends right now in real estate. Rising mortgage rates and the unclogging of supply chains.

As mortgage rates rise, more buyers are discouraged from making a purchase which decreases demand. At the same time, as supply chains slowly return to normal, homebuilders will be able to ramp up production and increase supply.

With these two factors in mind, there will be a mild recession in real estate over the coming years. It will be especially stark compared to the rapid growth we saw over the past two years. But, over the long-term, the market will return to normal. Real estate is still one of the best assets that you cam buy.

Matthew Schneider, CEO and founder of e-States

While often combined, we need to separate the housing market from commercial real estate. CRE is often resilient even in uncertain economic circumstances, and we’re predicting that industrial properties are going to be strong investments over the next 12–24 months. Some people also point out how the sudden cooling of the housing market coupled with increasing interest rates will drive people towards multifamily residential.

Additionally, when considering demographics, we know that medical office space and life science buildings are increasing in frequency to accommodate the ills of the population. Recognizing the factors across the board in CRE, it makes for a strong argument that commercial properties will be a strong hedge against inflation and maintain strength in an otherwise recessed economy.

Perry Zheng, founder & CEO, Cash Flow Marketplace

I see the trend to invest in real estate growing since stocks are performing poorly. This is a factor contributing to the lack of inventory, as many investors have plucked single-family homes out of the market to use as rentals both for long-term and short-term rentals like Airbnb and VRBO. This keeps the supply of single-family houses low for buyers, which in turn, keeps prices higher than this market would typically allow for under normal recessive markets.

Mark Stewart, Certified Public Accountant for HumanResource.com

My name is Mark Stewart and I am in-house Certified Public Accountant for HumanResource.com. We provide educational guides to help you build a happy, healthy, and productive workplace that is also in compliance with all state and federal regulations. Topics include compensation and benefits, employee training and development, performance management, and much more.

The real estate market has been established as a recession-proof market because of the various real estate niches that have proved resistant to economic downturns. In addition, real estate has also proven to be a necessity for consumers.

In 2023, even if there may be an increase in the interest rates, discouraging consumers from purchasing homes, we will see them moving to rental real estate and affordable real estate investments.

Therefore, there will be continuous and increased growth in the general real estate market.

Donald Olhausen Jr Owner of WeBuyHousesInSanDiego.com

Whether or not there will be growth in 2023 will entirely depend on interest rates. If jerome Powell continues to aggresively push interest rates higher, you will see a decrease in the buyer pool as well as a drop in prices. The size of this drop will be entirely dependent on the supply and demand ratios in these areas, with some drops being sizable and others less than 5%.

If interest rates do go down, there will be a noticable increase in sales as many buyers are simply waiting on the sidelines for interest rates to come back down. Over 70% of homeowners in my area have an interest rate less than 4%. Most of these homeowners will choose not to sell because they do not want to trade a 4% interest rate for a 7% interest rate. That being said there is still a huge supply shortage so that force is keeping prices propped up even as the buying poole evaporates.

My prediction is that prices will continue to fall in 2023 especially if we fall into a recession. I do not believe it will be another crash like 2008 because the fundamentals are totally different.

Derek Bauer, Assoc. Broker & Team Leader @ Real Estate One

While the likelihood of a 2023 economic recession appears to be growing, out of the last six recessions dating back to 1980, home values actually rose in four of them. In the most notable of those, the 2008 Great Recession, housing was at the forefront and values obviously suffered. At that time, nationally we were over 10 months of inventory on the market, whereas today we are hovering around 3 months of inventory on the market. A balanced market is 3 to 6 months of inventory and demand remains strong even in light of the higher interest rates. We are anticipating a healthy housing demand in 2023 regardless of interest rates, and though inventory may rise somewhat, we don’t expect a substantial influx such that supply would far outweigh demand. I believe that in many cases, buyers will still face some competitive offer situations given the supply challenges, and that overall prices will not pullback very much, if at all.

Though Covid played a factor in the substantial demand that started in mid 2020, I don’t foresee the Covid factor as being a variable in 2023 housing.

Mark Severino, Real Estate Investor at Best Texas House Buyers LLC

The single most interesting effect that covid had on real estate is the switch in the logistics world from JIT (Just In Time) fulfillment to stockpiling product. That translates to the real estate world in the form of warehouses. This is posed to be the most sector in real estate moving forward. The supply chain disruptions exposing the fragility of the global transportation has shown companies the need for local supply depots in order to fulfill business commitments in a timely manner. Every company is affected by this from raw materials to manufacturers to business to business. No one wants to wait and no one wants to hear excuses. Therefore the upswell in demand for warehousing is the next big wave in real estate.

David Tully, Realtor at eXp Realty

Over the last four months, the construction of single-family homes has decreased. On the other hand, the construction of multifamily homes is increasing over the last few years.

However, due to the higher mortgage rates and the rising cost of building materials, the growth of the multifamily market is likely to be stabilized within a few years. The number of new starts is likely to decrease by 8% in 2023, and another 5% in 2024.

Don Wede, Heartland Funding Inc

Homeowners, sellers, buyers, and renters may be unimpressed in 2023. There will be more homes for sale, homes will likely take longer to sell, and buyers will not encounter the intense competition that has been usual in recent years. Home sellers should be aware that fewer buyers are projected to be looking for a property in 2023, as rising home prices and mortgage rates drive some prospective purchasers to postpone their purchases. As a result, sellers should expect increased competition from other for-sale postings, lengthier transaction timescales, and more bargaining with buyers. It is going to be a challenging year for all housing industry professionals but with an eye on the emerging trends, a flexible attitude and a willingness to adapt, real estate agents will weather this storm and come out on the other side better for it. But while national trends are instructive, what matters most is what’s expected in your local market.

Casey Ames, Licensed Realtor of GemStateCashOffer

I’m expecting the growth in prices to slow down a bit. Prices will still be on the rise, but at a slower rate. The growth rate will drop down to 5.9%. But mortgage rates will be on the rise. I expect mortgage payments to rise by at least 22% in 2023.

Will the effect of covid19 be over? Not entirely. The effects of the pandemic won’t die down just yet. However, we will see an improvement in inventory. Stocks will be up by at least 20% since last year. But don’t expect anything like pre-pandemic levels.

There will be growth, but at a rather slow pace. It’s worth remembering that we’re recovering from a global catastrophe. And it is going to take years to get back to where we were, if we even can.

Eyal Pasternak, owner of Liberty House Buying Group

In 2023, it seems like the effect of Covid-19 will finally give way. Real estate marketing will thrive wildly under the dawn of this new year. Major manufacturing materials are readily available, meaning it will be easier to construct new homes.

According to expert analysts, home sales will decline by 7%, whereas the national median home price will increase by 1%. The abundance of markets will experience price gains, and some will foresee declines. But real estate housing will rebound in 2024, with a forecasted jump of 10% predicted. A 5% increase will follow this in the national median home price.

Tom Monson, Owner of Monson Lawn & Landscaping

One of the most helpful resources that I’ve used in the last year, and throughout my career in business is the United States Small Business Administration. This agency is specifically built to help people like me and businesses like mine whether you’re looking to get off the ground or just trying to get a loan to take your business to the next level. Whether you end up getting a loan or a grant or not it’s worth it to take a look because you may be leaving money on the table that could really help your business.

Richard Harless, owner of and realtor at Az Flat Fee

Currently, the market is stabilizing and we’re seeing a slow drop in prices and rents because before this we witnessed record high prices. I believe the cycle is going to continue into 2023 and we’re going to see an increase in home value at the start of the year. This is in part due to the fact that the current decrease in prices opens up markets to a new chunk of buyers in the form of millennials who are now buying up property since it is finally affordable for them. Inventory will continue to be lower than demand in 2023, even though some cities are going to witness an overall increase in houses because it is cheaper to build in the suburbs. This means that prices will rise steadily.

Coupled with this, borrowing is going to become more difficult as lenders will approve fewer applications owing to strict measures because of the current recession as well as the fact that borrowing is going to become more expensive. This means there will be an upward pressure on prices.

Currently, the US market is brimming with house buyers and has a limited inventory. So, despite the recession going on around us in nearly every industry, the housing market is faring well for now. Coupled with this, rising mortgage rates have put a further upward pressure on house prices. Selling a new house would mean you get premium prices and a worthwhile profit. However, if you don’t have another residence or still have to look for one, you should make sure that the high mortgage on that house doesn’t cancel out the premium you earn on your sale. Selling now is definitely the way to go for homeowners who have all their bases covered.

I hope this helps you out, feel free to reach out to me in case I missed out anything or if you feel like picking my brain a bit more

Bill Adams from Adams Realtors and Adams Commercial Real Estate

I feel that the “rate shock” that slowed the residential market in the last half of 2022 will gradually ease in 2023. Mortgage rates are tied to the 10-year U.S. Treasury bill rate which in tern reflects anticipated inflation. Weather through a recession or continued monetary tightening by the Federal Reserve Bank, the rate of inflation will fall during the first two quarters of next year. I expect that the traditional 30-year fixed rate home mortgage will be around 5% by mid-year 2023. The structural issues in the residential market that exist today, demand for housing outstripping the supply will continue throughout the new year and perhaps get worse as lower mortgage rates will drive more buyers into the market. House prices will increase by about 10% in 2023.

Jacob Butler, founder of Hunter Gather

“The 2020s were marked by a real estate boom, but the recent economic downturn has put a damper on home buying and investment.

The current state of the real estate market can be thought of in terms of a house fire: there’s a lot of smoke, but the flames haven’t yet reached your attic.

That said, we’re definitely looking at a return to growth in 2023 and beyond — and it won’t be a recessionary growth, either. We expect to see a return to normalcy as far as supply and demand goes, with more people moving into new homes, expanding their businesses, or growing their families.

But it’s not all rainbows and sunshine: some economists predict we’ll see some bumps along the way as well — namely due to rising interest rates and construction costs, slowing consumer confidence — but overall, it looks like a pretty promising time for builders.”

John Myers, Real Estate Agent and Qualifying Broker at Myers & Myers Real Estate

First, I would like to say that all real estate is local and the real estate market will respond differently in each market.

However, higher interest rates are going to keep sales depressed and will most likely cause sales to decrease in 2023. We have already seen sales growth decline by 18.2% in our market. In addition, rising interest rates along with high home prices are pushing many first time home buyers out of the market.

It is interesting that our market has not seen a decline in home prices, while home prices are declining in many markets.

The Federal Reserve has made it clear that they will raise interest rates in order to control inflation. Inflation will not be easily controlled so I expect to see sales to continue to decline or remain flat in the best case scenario.

The US is also starting to see layoffs, especially in the high tech industry. More layoffs will put pressure on home sales and home prices. We are expecting a slight decline in home prices in 2023 in our market.

Bill Samuel, residential real estate developer at Blue Ladder Development

My specific experience is in the residential housing niche of real estate so my comments will specifically address where I think the housing market is headed for 2023.

The current supply of homes for sale is still very low and roughly 60% less than pre-pandemic levels. However, year over year total inventory is now up slightly at 2% but the total inventory of homes for sale still sits near historically low levels.

In my opinion the most likely probability for 2023 housing prices is that values will be down 5%-15% next year.

Rashard Alomari, Founder and CEO of a real estate business — Fair Cash Deal

Forecast real estate market growth for 2023?

Unfortunately, prices will rise in 2023 as well. Mortgage payments will witness a 7.1% spike. This means taxes will be affected as well. The potential buyer will still have to pay way more than expected.

Will the effect of covid19 be over?

Covid-19’s effect isn’t ending anytime soon. The pandemic has affected every practice, giving birth to new ways of surviving. Real estate has also adjusted to these changes because people want safer living spaces.

Will there be a recession or growth in real estate?

It seems that real estate will rise above all challenges and won’t suffer a recession. That is because homes and buildings will continue to be built regardless of what happens. Buyers might have to tweak their budget a bit, but there’s no way out if someone really needs to buy a home.

Eric Jeanette, President of Dream Home Financing and FHA Lenders

I am Eric Jeanette and I am the President of Dream Home Financing and FHA Lenders. I have been in the lending business since 2002. I provide consumers with the most up to date mortgage information and then help them to find the loan program that best fits their needs.

We are already seeing prices begin to drop in many markets due to the significant interest rate increases. Homes are on the market longer now versus one year ago. My prediction is that home inventory will increase throughout 2023 which will continue to push prices lower. By the end of 2023 and into 2024 we will see many opportunities for home buyers to find lower prices.

The best time to buy will be when prices have come down, but before interest rates have dropped. I know it sounds intuitive to wait until rates are low, but when that happens, home prices will have already started to rise again.

Bruce Mohr, Senior Investment Advisor, and Credit Consultant at Fair Credit

In my opinion, the amount of housing inventory will increase in 2023, but it will take time. Currently, there are approximately 1.28 million properties for sale in the US. How many homeowners feel it’s a good time to sell will determine how soon the housing shortage gap closes. Mortgage interest rates are now circling about 7. It is understood that the FED can decide to raise the federal funds rate again in 2022 and 2023. Mortgage interest rates can rise as a result of this. People are currently discussing mortgage rates in the seventies. If the FED maintains doing this, mortgage interest rates could peak in the nines or perhaps tens during 2023.

By the summer or fall of 2023, the housing market will likely change and become a buyer’s market. No one will find this market to be simple. Both chances and difficulties will be present. So, if you’re a seller, talk to your Realtor about the best pricing techniques, market trends, and marketing plans. Create a winning strategy with your realtor and loan officer if you’re a buyer.

Jason Ault, Real Estate Expert & Consultant at Element Home Buyers

The impact Covid19 had on the real estate industry was significant. However, as the world began to ease back to normal, the real estate industry took off. The housing market saw a tremendous increase in prices and continues to do so. In 2023, it is expected that there will be a drop in housing prices.

Will there be a recession or growth in real estate? It all depends on the economy. However, there are a few good guesses that there will be mixed trends in the real estate market. The fluctuations in the economy dictate real estate market trends, so it would be wise to wait around a while before investing in property.

Ron Wysocarski, Broker and CEO at Wyse Home Team Realty

It’s hard to say that the market has a chance of expanding further in 2023. Even though the housing supply will increase somewhat, it won’t really suffice the demand. Along with that, customers are getting tired of the tough chase they go through to buy a house. Competitive bidding, tight negotiations, high closing costs, rising mortgage rates, etc. have killed the intention to get a house. So, the market is more likely to cool down and prices are supposed to drop. The house loaning expenses are now so high, buyers have realized that they’ll be bankrupt and soon have to abandon their homes if they choose to buy now.

Matt Teifke, founder and CEO of Teifke Real Estate

With the real estate market showing signs of recovery due to the improving economic conditions and consumer confidence, we are predicting an upward trend in its growth for 2023 and beyond. Many investors have already started investing in commercial properties, rental housing, and land development. With increased investment activity in these sectors, we anticipate the real estate market to continue its momentum in the coming years.

Corey Tyner, Founder | President at Buy Yo Dirt

BUYER OR SELLER MARKET

It has been a seller’s market for the past two years. In the majority of markets, will 2023 favour buyers or sellers more? Affordability challenges and economic concerns will lower home buyer demand, and the supply of homes for sale will remain small. Therefore, the market will continue to be more balanced rather than tipping one way or the other.

Leverage should vary across the country based on the market.

Due to increased demand for more space and the increased flexibility of remote working across the nation, we observed a new spike in bidding wars in suburban and smaller markets with the pandemic.

The aim is that larger markets may return to pre-pandemic levels. We will see greater demand now that many offices and enterprises operate at or close to full capacity.

HOUSING INVENTORY

The scarcity of homes in recent years has contributed to the market’s frenzy.

Inventory peaked at around a 13-month supply before the 2008 housing meltdown, which is twice the amount we would see in a healthy market. We currently have about three months’ worth of supplies, roughly half of what we require. Existing home inventory should remain low since current homeowners are unlikely to exchange their 3 per cent mortgage for a new home with a 7 per cent loan unless they really must. And during the past three months, builders have reduced the number of new starts. Therefore, it is unlikely that new development will result in a significant increase in supply any time soon.

Rhett Stubbendeck, CPCU | Chief Executive Officer, LeverageRx Inc.

I’m the CEO of LeverageRx. I lead the team at LeverageRx. We’re a technology-focused personal insurance company focused on helping medical professionals nationwide win with their finances. We currently insure thousands of doctors and their families with disability insurance, life insurance, and home & auto insurance.

As a financial expert, I believe interest rates and prices will not improve significantly in the coming years. There is a high probability that the steep interest rates due to the geopolitical uncertainties will remain for a long period of time, spanning 20223 and the years to come. However, there is a beacon of hope that these hard times might change over the coming years, as indicated by the gradual but already declining mortgage rates.

The effects of COVID-19 are bound to be over at one point. I believe 20203 might be the year when they finally fade into non-existence, as many Silicon Valley giants have already adopted pre-Covid growth, and there is a greater chance that the real estate market might follow the same trend.

In light of the current situation in industry, there will be a recession. The surging interest rates, high mortgage rates, and low inventory might be the key factors causing that.

Kris Lippi, Real Estate Broker and CEO at ISoldMyHouse

Home prices are not anticipated to decrease in the upcoming year, so many homebuyers will be priced out, and others may refuse to buy altogether. People will likely seek out alternative housing options in light of this scenario, so it’s reasonable to anticipate that the rental market will expand in 2023 and the years to come. As more hopeful homebuyers get priced out of the market, so will the increase in the demand for rentals. There are, however, no certainties here. In the event of a recession in 2023, the rental market might experience the opposite effects. People would be more likely to relocate with their parents, other family members, or their friends than to rent a place, owing to expensive monthly rent. This would result in a decrease in the demand for rentals.

Likewise, sellers would be eager to sell their homes during a recession but would be hesitant to reduce prices. However, people looking to escape paying excessive rent amounts won’t have enough money to purchase at such excessive costs. Due to the imbalance between supply and demand caused by this scenario, we can observe a market shift away from sellers and toward more stable, balanced conditions.

Jon Sanborn, Co-Founder at Brotherly Love Real Estate

The forecast for 2023 is diverse. The industry is showing signs of lower prices, reductions in buyer demand, and higher borrowing rates. Home prices may fall slightly but not drastically. As such, there is not much clarity.

However, Zillow, Fannie Mae, and Freddie Mac indicate that home prices may grow slightly. If inflation is persistent, the financial markets could consolidate that could result in higher mortgage rates that may impact the entire country’s housing market. In over two-thirds of the country’s prime housing markets, home values declined in the summer because of high mortgage rates. The shock of rising mortgage rates still continues to consume the economic market.

Despite a slow market and receding buyer enthusiasm, the anticipation is that home demand will continue to overtake the available inventory in 2023. The expected development must also factor in increasing rental costs.

Kim Abrams, CEO at Abrams Roofing

The rental market in bigger cities will keep declining.

Throughout the epidemic, there was unrest in the main American cities. Many individuals decided to leave big cities as a result of this disturbance. Many of these people looked for rental homes in the suburbs. The result was a sharp decline in the rental housing market in major cities. There is no disputing that this tendency will persist in 2023. Purchasing rental homes in the suburbs is definitely a smart choice if you want to get started quickly with real estate investing.

Benjamin Stenson, CEO at Norsemen Home Remodeling

Home prices will increase going forward

In the last two years, there has been a significant increase in demand for single-family houses in the United States. The demand for single-family homes has grown, which has caused property prices to soar. American housing prices fell immediately following the outbreak. This pattern has unquestionably changed since then. In the last year, the median price of a home in the US has climbed by about 15%. I predict that 2023 will be a terrific year for home sellers. Because more money is being spent on house improvements, the cost of homes in America is going up. Investments made by homeowners in appliances like energy-efficient appliances and dark cabinets can increase the value of their homes.

Jamie Penney, Owner, and Operator of MyHomeDwelling

Commercial Real Estate Will Be Affected By Remote Work in the Future

More companies than ever before began deploying remote employees as a result of the pandemic. People have continued to work remotely as things slowly return to normal throughout the globe. Although the ability to work from home is beneficial for employees, it has had a detrimental impact on the commercial real estate sector. There is no longer a requirement for a commercial workplace for companies that have shifted to a remote work paradigm. I believe the market suggests that in the upcoming year, the value of the commercial real estate sector will continue to decline.

Martin Carreon, Broker/Owner at Soco Wine Country Properties

The pandemic hit has made the housing market suffer the most worldwide. But the effect is cooling down and is likely to be over by the end of 2023. The hot competitive market for buyers is already dropping massively. The sellers’ upper hand in the market while the buyers suffering from high price hiking (10.6% lower than the previous year), low inventory (1.26 million listed homes), and more than the expected offer (come down to 2 from 5.6– number of offers made for a single property) on a single property is almost vanishing. The rates will even come down by the end of 2023 as predicted. All the signs and indications of the current housing market lead to the single predicted conclusion– the effect of COVID-19 will be over by the end of 2023!

There is an expected recession at the beginning of the 2023 housing market. Some states are already in recession. Due to the hiking rates, already all US buyers are taking a break from buying except the Gen Zs. Home prices have been dropping steadily and will drop significantly. Tennessee, Arizona, Vermont, South Carolina, Idaho, Texas, and many other states are already considered as the recessed housing markets. California, New Jersey, Illinois, and some other housing markets are considered as most vulnerable to recession in 2023. Overall, the recession housing market is the prediction in the coming days of 2023 which may become stable by the end of the year.

Emanuel Stafilidis, Owner/Operator, Capable Home Buyers

At the time of writing, early December 2022, the residential real estate market in Chesapeake Virginia and the surrounding cities including Norfolk, Portsmouth, Virginia Beach, Hampton and Newport News would still be considered a sellers market. The number of offers on properties has greatly reduced from 6 months ago and the time on market has increased to what I would consider to be pre-Covid numbers.

The interest rate increases have certainly slowed the market down but not stopped the market. We are seeing sellers decrease the listing price of houses and therefore it could be perceived that the prices are dropping but this is not the case. The price decreases are a result of sellers asking more than the market value hoping they can snag a buyer that will over pay.

The fully rehabbed houses we have listed recently have been listed at market value and have not needed to decrease in price and have sold for list price. The difference in Q4 compared to Q2, 2022 is the days on market. 21 now compared to 2 or 3 6 months ago.

I am of the opinion that this trend will continue for the first 1/2 of 2023 and then prices will start decreasing and the market will change to a buyers market. The recession is likely to proceed through 2024. The bottom of the housing market is likely to be seen Q1 2024 where the price drop will be viewed at approx 10–15% from the highs in Q2 2022.

Capable Home Buyers are preparing for the price decreases as our projects are typically 6 months long therefore we are buying now to sell mid 2023 right when prices start to decrease. The price decrease is factored into our buying strategy.

Doug Greene, Owner at Signature Properties

My perspective on this comes from running a home buying business out of Philadelphia. We operate largely on the distressed side of that business but have a really good pulse on what the general market and inventory is looking like at any given moment.

As my company and I look forward, we think real estate may be the last financial market to drop heavily going into 2023. We’ve seen it in stocks, crypto and many other sectors but so far real estate has maintained a fairly strong course upward. With interest rates higher and expected to stay at elevated levels well into 2023, we don’t anticipate buyers to find that accommodating for their purchasing behaviors.

Our forecast for 2023 is mild to negative growth in residential real estate for the majority of markets in the US. Covid-19 pricing and pressures are behind us for now. The shock that the pandemic brought to the inventory and overall market seems to be permanent — inventory is the most sensitive metric we are tracking. With a deficit of homes, and that compounded by the pandemic pressures, we are long-term bullish on real estate. 2023 could be a great year to take advantage of a moderate slow-down if you have the capital and patience to find a good discounted deal.

Michael Shapot, Licensed Associate Real Estate Broker at Keller Williams NYC

My crystal ball is cloudy. Predicting the future, like anticipating the weather and timing the market, is hit and miss. Additionally, real estate markets are hyper local and segmented; a strong market in rural areas, for example, doesn’t necessarily translate into a strong urban market. Certain price points may outperform the market as a whole, and other price points may underperform.

We know that the number of signed contracts in Q4 2022 will reflect the number of closed sales in 2023. Signed contracts in Q4 in NYC are way down, which doesn’t bode well for closings in early 2023. Similarly, the predictions are for a weak Wall Street bonus season, and uncertainty in the job market may also have a negative effect on real estate market growth. Will back-to-the-office requirements change the lifestyles and choices of housing consumers? On the other hand, historically, the spring and summer markets are typically strongest. Will pent up demand and limited supply fuel market growth? Who knows???

COVID 19 seems to be a non-issue in the real estate market currently, but that may change.

Lynne Martin, Owner and CEO at Cash for houses

The market will slow down over the next 12 months, following a period of hyperactivity. According to Morgan Stanley and Case-Shiller Index, house prices are expected to fall 4% in 2023. There are plenty of reasons for this prediction, and one is the rate hike. A year ago, the average interest rate on a 30-year fixed mortgage was roughly 3%. The average rate is now 7.08%, according to Freddie Mac data. In the past 10 months, the average mortgage has witnessed four percentage point hikes from the Fed in a bid to tackle inflation. Undoubtedly, this would significantly impact first-time home buyers or potential movers.

2023 won’t be the only year to witness this price drop, as the property market will bottom out in 2024. This coincides with Fed chair Jerome Powell’s statement after the latest rate hike. According to him, the interest rate cycle may last longer than planned, peaking around 5% in Q4 2023. What does this mean for home buyers? With mortgages becoming more expensive as time progresses, home buyers will likely hold off on purchasing a home, which slows down the market. However, house prices will likely rebound in 2025 if inflation and interest rates decelerate.

Author Bio: Bobin D’silva is a blogger and online marketer specializing in real estate industry. He loves to listen pop music in his free time. You can connect him on Linkedin.

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