“There are a variety of opinions related to the 2023 forecast. After 30 years of being in real estate, I have experienced a wide variety of markets, all driven by different forces and all unique to each other. What drives the housing market up or down seems to differ in each cycle. Consumer confidence as it relates to home buying is a derivative of interest rates, job security, economic outlook, national and international political concerns, media messaging and a host of other influences.
Most buyers purchase a home because they need a place to live and they plan on staying in their home for a period of years. In the greater Boston market we are insulated when it comes to significant price fluctuation. Much of the rest of the nation is not as protected as we are when it comes to value swings. On the East coast of the United States the Boston and N.Y. suburban markets orbit around significant employment hubs. In greater Boston we have an unemployment rate that has been floating below 3%. Last year at a similar time the unemployment rate was higher.
Our job numbers have improved year over year. Certainly, as many look at their investment portfolios, insecurity can be had but in many cases no real losses have occurred. People who are heavily invested will ride out the cycle. For others who have cash laying around, this is an opportunity when it comes to buying on Wall Street. Is it an opportunity to buy on Main Street? The answer is, if you’re looking for an opportunity to buy a home in the greater Boston market, when it comes to housing, you will be waiting forever and it’s not a practical expectation.
We are cycling into a normal housing market. Normal…Do you remember that? You bring a house to market and it takes a few months to sell and you’re happy when it does. It may not sell on weekend one with 20 offers but the previous market was the anomaly. You may even need to negotiate a bit if you’re a seller. If you’re a buyer, you may have the opportunity to buy a home for less than the asking price. Imagine a crazy world where you spend hundreds of thousands of dollars (in many cases millions) on an object and you get to inspect it before you buy it. Imagine a world where you also get an opportunity to speak to your lender before you’re fully committed. I know this seems a bit crazy but you may even be able to think about it before you buy it. Weird, I know, but that may be the world we live in. This won’t be the case with every home but it will be the case with the majority. In 2023, in demand locations will still draw more than one buyer, but everyone else can expect a normal market.
Now for some bad news for buyers. If you’re dreaming of buying a home at a significantly depreciated price, it’s not going to happen. In many cases the value of a home in the Boston suburbs has gone up 30% to 60% since the housing bubble of 2007. If we have a percentage or two or even 10% depreciation over an entire depreciation cycle (unlikely in our communities) we are so far above yesteryears values that there is no amazing deal out there and there never will be.
Supply and demand still drive home values and when you’re in a strong job hub, supply will always be greater than demand.
If you are buying a home and are borrowing a significant amount of capital then be prepared for a higher monthly payment for a few years. Not a reason to not move forward with a purchase and still far better than renting. That’s if you can find a rental that you want to actually live in for an extended period of time. If you are hoping for interest rates to come down before you buy, just be ready for a very competitive real estate market when you jump back in. Certainly better to buy now and find the best short term mortgage you can and refinance later. We have all experienced or heard about how frustrating it is to purchase in a competitive market. This is the time to buy if you can afford to buy.
If you are selling, catch the market where you can. We are just coming off of the hottest real estate market I have experienced in my lifetime. Sell and make your next play. I say this because housing has appreciated exponentially and you can still monetize significant gains. This is not a depreciation cycle where anyone is in the red on their mortgage as it relates to home values. A key reason why home sellers will never experience the horror stories of previous cycles. That said, be ready for a normal experience. Put your house on the market and let professionals like myself do their job. We will get it done for you at the highest standard and get you the highest net return the market affords you.
No matter how you feel when you see a new home being built in your neighborhood or community, we still can not meet supply demands when it comes to housing, specifically when it comes to new construction or fully updated homes. Building regulations are making it harder and harder to build and be profitable.
It comes with too much risk for the builders and a constant increase in material pricing can’t always be moved on to the consumer. I go back to supply and demand when it comes to the market’s overall direction.
2023 will be a solid real estate year for most and I say ‘get in where you can fit in.’ Don’t make your decisions to buy or sell based on a news cycle. Make housing decisions based on what you and your family would like to do or need to do. If you can afford it…do it and go make your living in whatever business or category you make it in.” – Zur Attias