2023 Predictions? What are your predictions?

Question

Here are my predictions, would love to see what your predictions are?

Rates - Mid 4 to low 5% by year end on conventional

Real Estate Market – Overall market down, some markets worse than other, some submarkets will do OK and other markets ending the year lower.  5 to 10% correction on the average.

Best Investment opportunities – First time home buyers get lower prices, closing cost paid for and repairs fixed or credit.  Buyers assuming FHA/VA loans at low rates seeing this already, 2-to-4-unit properties already seeing discounts and good deals happen in San Diego.  Commercial 5+, Not seeing much yet in San Diego market, CAP rates still too low for how high interest rates are.

Best Market - Florida

Worst Market - Arizona

THE FED – Start cutting rates slowly by the end of the year.

Recession – We will see this really show up by the second half of 2023.  Jobs losses, consumer pull back and real estate market seeing more pain.

Jobs – unemployment ending the year around 5%

Mike Dymski · Answer

If rates are in the mid 4s to low 5s, there will be no concerns regarding a housing correction.

Kenny Simpson · Answer

That was a prediction, it could be Vegas, Utah but I thought AZ, more specific Phenix.  I know a ton if flippers, wholesales, syndicators, apartment owners that are very active and boots on the ground.  Inventory rising, lots of CA people flooded the market and purchased.  Lots of Wallstreet buyers bought a ton and I think Phoenix got tons of capital in that paid very high prices.  Vacancy rate according to my friends for rentals is getting close to 10%.  I think AZ just like Vegas becomes a BOOM and Bust market due to all the capital that comes in these markets during the good times.  Just my opinion or course.

Tracy Ross · Answer

Kenny I completely agree!

I'm in the Boise market which was one of the highest in year over year growth so we are seeing declines right now. And with holidays and the weather I think a lot of people are waiting to list until spring. I think we may have a flood of inventory on the market here in spring and see prices continue to decline. But I also believe inflation will continue to decline and rates will lower at the end of 2023 and we will see prices start to stabilize. I bought an STR last year at 6.125% and I can't WAIT to refinance that baby!! :)

John Morgan · Answer

I see the fed slowing down in 2023 with interest rates remaining in the 7% range for a few years. Or until a major economic recession hits. I see inflation slowing down to around 4 or 5% by years end. Consumer spending and confidence is still high leaving the economy flush with cash circulating. I see housing prices only down 10-15% at the most in some markets from their highs. Home prices went up on average 30-40% in most markets since 2020 so a 10-20% drop isn’t that bad considering how much interest rates have shot up. And I see the unemployment rate still very low by the end of the year due to a labor shortage.

Chad McMahan · Answer

FED-

Yes, very likely- but also may hold until sometime 2024.

Recession-

I'm hesitant to use this word. Bottom line, inflation is going to really hurt most people, as it already has been. The best way to insulate ourselves is to intelligently invest in real estate for cash flow and well positioned, based on property value and in good market areas.

Jobs-

Tough to say. A lot of changes will come this year- many of which haven't been announced or hinted at.

Galen Ikonomov · Answer

I respect your opinion and prediction, but would you summarize why Arizona would be the worst market?

Kenny Simpson · Answer

It will effect a lot more than real estate, the average payment that is NOT being paid is pretty high and that extra income that are taking in is helping them a lot.  Why the government keeps pushing out the payments,

Galen Ikonomov · Answer

I agree with you. The point about the capital and people is true. Like you have mentioned it could happen somewhere else. I actually think that it is going to be worse in cities with high property taxes.

Anyway, I hope something happens so things get normal. Enough with the unreal numbers.

Kenny Simpson · Answer

insurance prices are a major problem and parts of Florida will feel pain from that and just to much capital in and over demand for sure.

J. Mitchell Bernier · Answer

Here are my thoughts.

Think Rates will stay above the 5% range and will most likely be closer to 5.5-6.5%, FED will not lower rates until 2024 and it will be very small increments when they do. Housing market as a whole will come down 10-15% with some markets being over 20-30%. Best markets will continue to be the lower priced affordable markets. Inflation will prove to be sticky and stay above the 2% target at around 4%.

2023 Predictions? What are your predictions?

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