Welcome to 2023! As expected, there wasn’t very much activity in the final two weeks of 2022. In Northwest Seattle we had 30 homes go under contract, which is the same number of homes that went under contract for the last two weeks in 2021. I was pleasantly surprised to see that we had kept up with activity from a year ago.
So, what can we expect for 2023? I did a little research to see what industry professionals are predicting nationwide for 2023. The biggest challenge to the Real Estate market is mortgage interest rates. The Mortgage Bankers Association (MBA) and the National Association of Realtors (NAR) are both expecting that mortgage interest rates will come down throughout the year to around the mid 5% range by year end. Freddie Mac and Fannie Mae have a more conservative outlook and expect rates to stabilize in the low to mid 6% range. Danielle Hale, Chief Economist from Realtor.com was even more pessimistic and predicted rates to average 7.1% by the end of 2023. Rates will of course depend on how quickly inflation slows and the Fed’s response. Predominantly, expectations are that the Fed will continue to increase rates, but at a slower pace in 2023.
What about home prices? The MBA is predicting prices to remain stable throughout the year. National Association of Realtors Chief Economist Lawrence Yun has similar expectations and is forecasting a very modest increase of just 0.3%. He went on to say that “Half of the country may experience small price gains, while the other half may see slight price declines”. Realtor.com Chief Economist Danielle Hale is one of the more optimistic voices out there, especially when you consider her predictions on interest rates. She is projecting a 5.4% increase in home prices. One of the issues she points to is the lack of inventory for Buyers, which will help stabilize prices.
Speaking of inventory, for years, nationwide we have been grappling with a lack of housing units. In October 2022 Fannie Mae put out a report analyzing 75 metro areas and concluded that the US had a housing shortage estimated at 4.4 million units. This includes all housing units– single family and multi-family. This is up from the 2019 estimate of 3.8 million. This shortage is not going to get better anytime soon. The National Association of Home Builders (NAHB) expects house starts to drop by double digits for 2023. In 2022 builder confidence dropped as mortgage rates increased. Housing starts at the beginning of 2021 was 1.72 million and dwindled to 1.461 million by the 3rd quarter. The actual number for 2022 starts are not in yet, but are projected to be just under 1.5 million.
Another key factor that we believe will continue to impact our local market is the reluctance of people to put their homes on the market. We are specifically talking about “move-up” Sellers. These are homeowners who may want to buy a bigger home, or move to a different neighborhood, or buy a view home, but are reluctant to get rid of their current mortgage rate that is probably in the 3% range for a new mortgage rate that is easily into the 6% range. This lack of inventory will help keep our housing values stable.
While it’s hard to predict what will happen in 2023, what you can count on is that Steve and I will continue to watch our local Real Estate market on a weekly basis and report on this every other week. You can count on us in 2023 and beyond!
If you are not getting our bi-weekly updates, but would like to, please email us.
As always if you have any questions, please feel free to reach out to either Steve or myself. See you next year!
-Steve & Sandra
𝐴𝑛𝑑 𝑎𝑠 𝑎𝑙𝑤𝑎𝑦𝑠, 𝑖𝑓 𝑦𝑜𝑢 ℎ𝑎𝑣𝑒 𝑎𝑛𝑦 𝑎𝑑𝑑𝑖𝑡𝑖𝑜𝑛𝑎𝑙 𝑟𝑒𝑎𝑙 𝑒𝑠𝑡𝑎𝑡𝑒 𝑞𝑢𝑒𝑠𝑡𝑖𝑜𝑛𝑠, 𝑓𝑒𝑒𝑙 𝑓𝑟𝑒𝑒 𝑡𝑜 𝑐𝑎𝑙𝑙/𝑡𝑒𝑥𝑡 𝑢𝑠 𝑎𝑛𝑦 𝑡𝑖𝑚𝑒! 𝑊𝑒’𝑟𝑒 𝑎𝑙𝑤𝑎𝑦𝑠 ℎ𝑒𝑟𝑒 𝑡𝑜 ℎ𝑒𝑙𝑝!
Steve 📲 (c) 206-769-9577 📧stevehill@windermere.com
Sandra 📲 (c) 206-271-7100 📧sbrenner@windermere.com
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Windermere Real Estate /FN
