As we close the books on 2022 and turn the page to a new year, there are so many questions about the current, previous and upcoming real estate market that I’m asked every day. The best way for me to discuss these topics is to pose a few questions and give you my opinion in the form of the answers … a “Q & A” of the real estate market.
What was the biggest surprise in 2022?
Obviously the seven interest rate hikes; the most recent being on December 14th (Merry Christmas). With the cost of money changing so significantly and so quickly, it sent shockwaves into the market and priced many buyers out of being able to purchase the home they had their eye on. Thankfully, we are starting to see buyers coming back into the market over the past few months.
Are we experiencing a bubble which will burst in 2023?
No. This market, while challenging and a little unpredictable, is nothing like the market of 2008-09 when we experienced the mortgage meltdown. Right now, sellers still have equity that was gained from the pandemic era. Homes went up 30% during those two years. Even if we lose equity in the next few years while waiting for the economy to stabilize, homeowners shouldn’t be underwater. Having a mortgage balance higher than what the home was worth is what caused sellers to walk away from their homes during the meltdown. We don’t anticipate that happening this time.
Are we going to see prices come down in 2023?
The short answer is “probably”, but much will depend on the job market and ongoing volatility of the interest rates. We are anticipating an approximate reduction of up to 10% in home values if rates remain around 7% and if we start to see lay-offs. This will significantly affect the market. It could also cause sellers to need to put their homes on the market if they don’t have enough savings to withstand a jobless period. But, if our economy improves, we will see modest appreciation. It’s still too early to be certain.
Is it a good time to buy or sell real estate?
If you are selling a home and purchasing a different home that better suits your needs, it really doesn’t matter what the market is doing. You’ll be selling and buying in the same type of market. Sellers right now are having to be patient because it could take 30-45 days to obtain a buyer, unlike last year. As for the interest rates, you can ask the seller to contribute toward your closing costs to buy-down the rate, and if rates settle down in the months and years to come, you can then refinance into a more comfortable loan. Real estate is still one of the best long-term investments available.
Why are there so few homes on the market and will that change?
In the first six months of 2023, I’m hopeful that we will have more homes to choose from but unfortunately most people are comfortable where they are. Our local population has grown, but the number of homes in our region hasn’t kept up with that growth. It may seem like a lot of people are moving out of the area, but it’s really not significant enough to make a difference. So, if you want to sell, call me.
Are Sellers considering “contingent offers” from Buyers?
Yes, if your home is in escrow. I know it sounds scary to think of listing your home if you don’t know where you’re going, but it’s almost the only way that we can ensure writing an offer that a seller will consider. When we list your home and find a buyer, that buyer has to be willing to wait until you find and negotiate your replacement property. Otherwise, you’re contingent on getting your home on the market and finding a buyer, which can take 30-45 days. Most sellers are not willing to wait that long; but they might be willing if you’re already in escrow and can move forward with the process right away. I won’t let you become homeless – I promise 🙂 Let’s talk options!
If you have friends and family moving outside of the area, can we help them?
Absolutely!! We go where you go if it’s within the four-county region. In certain circumstances, we’ll even go into the bay area. If it’s outside of our area or even outside the state, we can help you find a great Realtor that will work hard for you.
If a move is in your 2023 plans, let us know how we can be of service!
Happy New Year!!
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