Anyone hoping to buy or sell a home in the new year likely has a lot of trepidation over what 2023 will bring. By and large, 2022 brought many changes to the real estate market, including changing property values and rapidly rising interest rates, which makes it hard to imagine what we could possibly see in 2023. While nobody can truly know what will happen in the world of real estate now that 2022 is finally in our rear-view mirror, there are some people who have a pretty good idea of what's to come.
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We talked to five real estate agents to find out what they see on the horizon and what you can probably expect to see happen in 2023.
Meet the Experts
- Sam Sawyer, a licensed real estate professional and CEO and founder of Pinnacle Realty Advisors in Texas
- Laura Adams, senior real estate analyst at Aceable in Florida
- Kimberly Jay, a broker with Compass in New York
- Noah Rosenblatt, co-founder of UrbanDigs
- Shonda Johnson, real estate agent with Nash and Company in Colorado
Rates Should Settle Down
There's good news for people who have been anxiously watching the Federal Reserve Bank issue rate increase after rate increase, according to Sam Sawyer, a licensed real estate professional and CEO and founder of Pinnacle Realty Advisors in Texas. "As we enter 2023, I expect the market to find some solid footing as rates calm down," he says. Hopefully that means record-setting rate hikes will soon be a thing of the past!
The Housing Market Will Stabilize in the Spring
Spring normally signals the start of the "on" season for the housing market. Thanks to the unusually volatile past two years, there hasn't really been an "off" season for selling and buying, but Sawyer says that will change in the new year. "Inventory levels will catch back up, and more buyers and sellers will feel comfortable coming back into the market in the spring," he says, adding that some markets may see rapid price declines, particularly in areas with slow or flat job growth.
"In the major Texas metros, you will see home prices appreciate slightly this year, especially in Dallas," he says. "Austin could take a hit because of the tech layoffs, but Texas in general has many positive tailwinds compared to some other states."
There Won’t Be as Much Heavy Competition
There's good news for anyone who was scared off by the intense bidding wars that were a staple of 2020 and 2021. "It will be a good year for buyers and those stretched thin — there will be less competition for homes in 2023, which will bring down the peak listing prices we've seen to more realistic rates," says Laura Adams, senior real estate analyst at Aceable in Florida.
Seller Concessions Will Be Back on the Table
When it's a seller's market, homeowners don't need to do much to woo potential buyers, but Adams says we can expect to see more sellers trying to sweeten the pot by offering buyers perks next year. "As prices begin to decline, the market will stabilize, making buyers more likely to transact and sellers more likely to negotiate to help close the deal (e.g., helping the buyer with the down payment in advance)."
Real Estate as an Investment May Have Hit Its Peak
Today's home prices coupled with rising rates makes gobbling up real estate in the hopes of turning a profit a little less appealing, according to Adams. "Investing in real estate has likely seen its peak and will stabilize, which will be good for first-time buyers hoping to get their hands in the market."
Markets that have been heavily picked over by landlords may start to open back up for regular buyers again, hopefully reducing the cost of rent in the process.
Some Areas Will Remain Out of Reach
While much of the country can expect to see a stabilization according to these predictions, some markets will remain red hot in the new year. "In suburban markets near major cities, inventory will remain low with solid demand and stable prices," says Kimberly Jay, broker with Compass in New York. "In Manhattan, some first-time homebuyers will be priced out and continue to rent, keeping rents near all-time highs."
Jay says that real estate will continue to be all about the local market. "Areas where prices skyrocketed over the last two years will likely see the largest price reductions," she explains. That could be good news if you're hoping to buy a new home in one of the areas where prices spiked over the past two years.
We Could Officially Be Entering a Buyer’s Market
There may be bad news for sellers who waited a bit too long to take advantage of higher home values, according to Noah Rosenblatt, co-founder of UrbanDigs. "I expect 2023 to be generally a low-volume year for housing, meaning spreads between bid and ask may be wider than usual, resulting in longer times on the market and higher discount rates," he says. "For contrarian buyers seeking value and opportunity, 2023 should provide both."
Rosenblatt says this prediction should hold true across the U.S. "Urban markets will likely see varying versions of this general story based on the local market forces regarding supply, deal volume, the rental sector, and cap rate trends," he says.
There Shouldn’t Be Any (More) Curveballs
Anyone who feels shell shocked after two years of unprecedented changes in the world of real estate should take heart in the predictions of Shonda Johnson, real estate agent with Nash and Company in Colorado. "As of right now, I do not see anything new coming down the pike," she says. "I do see the market continuing to stabilize and shifting back into a normal market where listings are no longer flying off the market within a week, and buyers are able to take their time and weigh their options when it comes to choosing their homes and investments."
That's welcome news for people who have been trying to time the market right or get themselves into a good position to buy. While none of these predictions are guaranteed, they do all seem to point toward the same outcome: As far as the world of real estate is concerned, the U.S. is about to return to business as normal for the first time in nearly three years.