Great News About the Market from a Pro

Dated: January 24 2023

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2022 will go down as one of the most interesting real estate markets I’ve seen in my 35 years in the industry. What was an incredibly strong market at the beginning of the year, turned into one of the most challenged markets as mortgage rates rose from 3.1% in January to 7.375% in October. What was very strong buyer demand dried up faster than a quick rain shower on a hot summer day.

NAR’s full year data shows existing home sales totaled 5.03M, down 17.8% from the 6.12M home sales in 2021. Interestingly enough, while we have started to see price price declines in various markets around the country, the national median price for existing home sales has yet to see a decline. In fact, December 2022 marked the 130th consecutive month of year-over-year price gains. That means price appreciation has been consistent every month since April 2012!

Great for homeowners, however a challenge for many home buyers, and especially in a higher interest rate environment. Affordability is the greatest challenge for the market today.

Here’s some good news:

1. The Fed has been hard at work to ease inflation and we have seen consecutive quarters of a declining inflation rate. With that, future (Fed Funds) rate increases are expected to ease and we should see positive impact on mortgage rates.

2. Many economist predict a pending recession, however, the work the Fed has done should land the economy softly and with that we should see a shallow and short recessionary period.

3. The pent up demand for housing will return as mortgage rates decline and higher affordability returns.

4. Inventory remains low, however, we have seen a considerable increase over the past 12 months providing more options for buyers.

5. And most importantly…it’s projected that we will see nearly 5M homes sold in 2023. How much of that business do you plan to take?

One thing I’ve learned by living through 35 years of cycles in this industry, is there is always opportunity regardless of the direction of the market.

Integrity, determination, mindset, market knowledge and a "trusted advisor" approach is all it takes. Make 2023 Your Personal Carer Best Year!

Rick Davidson
Cairn Real Estate Holdings, LLC

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