Unfortunately, in 2022 our economy was flooded by inflation, steep interest rates, and recession fears - paving the way for a seemingly rocky 2023. Whether you’re a bystander or deep in the trenches, we all felt the brunt of record-breaking 2022 in one way or another. Mortgage rates reached just above a staggering 7%. To put that number in perspective, that’s about double the mortgage rates the previous year. Feeling a little down in the dumps yet? Well - fortunately for all of us, 2023 has a different tone to it. Just today, our lender informed our team that rates are currently clocked in at around 5.5%. That’s a 2% drop in just a couple of months!
2023 is widely beginning to be referred to as the year of getting back to normal! Music to our ears, and our pockets. According to Norada Real Estate Investments, California's median home price is around $758,600. Dropping around 8.8% after rising 5.7% in 2022. On the other hand, condo prices have declined by 1.2%! Now couldn’t be a more perfect time to purchase that investment condo you’ve been dreaming of. Imagine a cozy ski-in-ski-out condo in Mammoth for the wintertime or beachfront property for the summer! When you’re not spending your weekends in the condo and making unforgettable family memories, rent it out on Airbnb to create a stream of passive income. Speaking of investment properties, did you know that national rent prices are up by around 11%? Although this may not be the best news for renters, the increase facilitates excellent conditions for those who are looking to lease their homes.
“For most of this year, prospective home buyers have faced the dual challenges of elevated mortgage rates and limited housing inventory,” explained NAR’s president Kenny Parcell, in a recent report.
The “supply and demand” of the market has officially shifted from a scarce lack of demand to a booming influx - with little to no supply. While demand shuttered with covid cases on the rise, our return to normalcy indicates a stronger presence in demand for housing. The basics of supply and demand reign true in real estate, even in a daunting market.
With mortgage rates dropping again, buyers who have been on the fence are more attracted to the idea of investing in a home. This shift sparks optimism in buyers and sellers, generating an influx of much-needed inventory. Like the perfect wave after a lull in the set, the Spring/Summer market is shaping up to be a glassy, 6-foot barrel beauty.
So - the big question is - will 2023 be a buyers' or sellers' market?
Drumroll, please… 2023 is set to continue down the path favoring sellers. However, that doesn’t mean our buyers are truly getting the short end of the stick. The odds are more favorable, and rates are becoming more reasonable than they were a few months ago. With the dark will always come the light, and 2023 has the potential to be an extremely bright year. Keep up to date with Caskey’s blogs for more easy-to-digest market updates!