Here is one of my favorite things to do - make predictions for the real estate in the coming year! The data I’m reviewing indicates the real estate market “bottomed” in November. 2023 will be a very good year for real estate - consider the following Data:
1. 4th Quarter GDP. The economy grew at 2.9%
3. Inflation CPI - Inflation peaked & it's going back down.
4. 30 Year Mortgage rate - Rates peaked in November and they are going back down. (With a good credit score and a good mortgage broker you can get a sub 6% mortgage.
5. Unemployment in CA, although a little higher than the national average, we are at historic lows. Forget the tech layoff headlines, it's a drop in the bucket. (If you lost your job, I'm sorry, I have faith you will get a better one!)
6. Economist point of view - (forget about me, I'm "just" a realtor!
Bottom Line:
In 2022, locally, we saw an approximate 10% correction in home prices. That % number varies wildly depending on whether you are considering:Single Family Home or a Condo, Location - something West or East of the 405, Turnkey or Fixer: whether or not the home was turnkey property or a fixer (fixers require contractors, materials, permits and all those things cost more from inflation, so they were “down” even more in my opinion, nobody wanted to deal with that, since they were already stretching with increase mortgage rates).
Robert's prediction for 2023 - it will be a good year / a recovery year
-The Fed is near the end of it’s rate hike cycle.
-Political chaos is coming this summer with the debt ceiling debate. The Fed will have to stop tightening, less this political uncertainty tips the economy into a recession.
-Interest rates will continue to go down.
-Inventory (& some sense of normalcy will return to the market). There was a great “pull forward of Selling/buying activity from the Pandemic, then a sluggish lag & then a complete slow down due to spiking interest rates. All of that hit it’s worst point in November 2022 (a seasonally slow time as well). That was the bottom.
- The housing market will recover, it already is, I'm seeing and I have increased activity, the bid & ask gap is closing (the amount the Seller wants, the amount the Buyer is willing to pay) & price appreciation will resume at the typical pace – 3-5% per year.
We all like to think we are experts on real estate, show business and whatever we actually do for a living - but the numbers, charts & data above are pretty compelling to me.
Email/call/Reach out to me if you want to discuss Selling or Buying.
Check out my closed sales to see the areas I focus on & the awesome places I have bought & sold (on behalf of awesome people).
Good Luck!
-Robert Maschio / January 2023
