My 2023 Predictions
2023 is likely to be a more stable year than 2022 turned out to be.
As we take a look back at our predictions for 2022, we find that a lot of them came true. If you'd like to take a look at what those predictions were, click this link. However, there were still some unforeseen things that happened.
One thing that we didn't predict was how quickly interest rates would rise and how high they would go—Even economists or people that were making forecasts didn’t see that coming. As the year starts, I’d like to make my predictions for the year, so we can look back and see whether we got it right. Here are my predictions for 2023.
First, I think that in the D.C. area, we're going to continue to see different markets have different conditions. We have some markets where inventory’s very low, where multiple offers are still the norm. We have other markets where there is a ton of inventory and seemingly not many buyers, and prices are declining. So we really have a wide range of conditions, and now we have a lot in between too, where the market conditions are kind of right in line with what we saw in 2019, which everybody remembers. We did not think 2019 was a bad market.
On average, our market's pretty healthy and stable right now, but we're going to continue to see a lot of variety. I think that higher price ranges will continue to experience low inventory and high buyer demand. Lower price ranges will continue to be a buyer's market because I don't really see affordability improving anytime soon. I think that interest rates will stabilize and decline and won’t go below 5%, but I think they could get down to the mid-fives, and probably stay there for the foreseeable future. As we see interest rates come down, I think that we will see more buyers and sellers re-enter the market.
"Interest rates have a massive impact on our overall real estate market."
One of the reasons why people are holding back from moving forward with their housing plans is the uncertainty and unpredictability of the market. If sellers can perceive that we have stability and that rates aren't going to shoot up as soon as they put their homes on the market, they'll be more likely to move forward with their real estate goals.
The overall number of homes bought and sold will likely increase but be stable at low 2021 levels. Rents may continue to increase, especially for non-luxury housing, which I think has higher demand than luxury apartments. We have thousands and thousands of brand-new luxury apartment units, and not that many people may want to pay that price, especially if you're saving up to buy. Rents may continue to increase, but not at the same rate they did in 2022.
For sellers, property conditions are going to continue to play a really large role in your success. When buyers have more options, sellers really need to do more to attract a buyer's attention, especially with online pictures. Things like painting, staging, and decluttering are more important than ever.
Last but not least, affordability may become more of a challenge than ever for first-time buyers, especially if you don't have equity in a property and you're looking at higher housing payments. I think buyers should buy when they can buy. Waiting won’t increase the affordability necessarily. If a buyer can move forward with a purchase at current interest rates, they are more likely to get a better price than if they wait. While rates might come down, prices will typically go up, and you can always refinance the rate, but the price you have is the price you have.
These are my predictions. I can't wait for a year from now to go back and look at what has happened. If you have any questions at all about the specifics of these or how they might impact you and your housing decisions, please don't hesitate to call or email me. I would love to help you.