By Rich La Rue
Toward the end of 2022, the real estate market started to experience a leveling out period due to high mortgage rates. The increase in rates resulted in lower home costs and increased inventory. Now, as people are looking to invest in 2023, they are asking big questions: Are we going to experience the crash we’ve been fearing and what is the Metro Phoenix housing market forecast?
Although it is difficult to predict trends for the next year, many have theories based on previous market cycles. However, market forecasts are most accurate two to three months in advance. It is difficult to deduce what all of 2023 will look like, but a few real estate analysts are attempting to do so.
Here’s what experts are predicting for the 2023 Phoenix housing market forecast.
Prediction #1: The market is growing, but will slow down in 2023
Slowing market conditions are expected to persist through 2023. According to Danielle Hale from Realtor.com, mortgage rates and home prices will remain elevated, but slow to their pre-pandemic average of 5.4%. According to Money.com, experts suggest sales will lag heading into the spring but will pick up during the second half of the year. This is partly due to high mortgage rates declining as Lawrence Yun, chief economist at NAR says “I think the peak has already occurred and we are on a downward path.” If mortgage rates decline, it would increase affordability for homeowners.
Prediction #2: Buyer power will not fully return
Buyers have been waiting to regain power in the market but have been faced with bidding wars the past couple of years, then struck with high interest rates. However, Taylor Marr from Redfin predicted that slower economic growth will likely bring mortgage rates down, making things more affordable for buyers and result in a possible uptick in sales in early 2023. Also, since sellers are facing more competition with high inventory and high interest rates, buyers might have a slight advantage to ask for various perks on the contact (inspection, terms, cheaper price, etc.).
Prediction #3: For-sale inventory is expected to increase
Some say buyers can anticipate a continued gradual increase in inventory as overall market conditions slow. According to Hale from Realtor.com, total inventory is predicted to grow by 22.8% in 2023 compared to 4% growth overall in 2022. For-sale inventory is expected to increase because the market is cooling, and homes are not selling as rapidly as they were the past couple of years. Therefore, buyers will have more options for investment than they’ve had.
As people move through the new year looking to buy and sell, market trends are under a close eye. Varying theories and predictions based on 2022 are plentiful, but the most accurate forecasts are made within two to three months in advance and will become the most helpful when making housing decisions.
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