Market Update January 2023- What happened in 2022 and my predictions for this year!
As I predicted last January, we saw two very different markets in 2022! The first half had very low Inventory, very high demand, and very low Mortgage Interest Rates! This triple threat caused a market tailwind of multiple offer activity that pushed prices up with an appreciation pace of close to 20% annually!
We predicted that Inflation would change everything, and boy did it- quickly and aggressively! The Housing market went into recession mode in mid-June. Interest rates rose quickly, which made affordability a big issue for many buyers, and as a result inventory increased. The Housing Market was trying to figure out how to handle higher prices and higher interest rates.
The headwinds came with full force the second half of the year, and the market ended the year with 21% fewer homes Sold than in 2021 Tthe Average price for residential homes for the year was $681,000, which is still a remarkable 11.2% higher than the 2021 average. As we balance out the positives and the negatives, 2022 was actually still a very good year for housing.
10 Predictions for 2023
1. There is No Housing Bubble - No, we are not headed for a crash.
2. Inflation has seen its Peak - Thank Goodness!
3. The 2023 Market will be very similar to 2022- Historically our inventory will be low.
4. Mortgage Rates Will Drop- Don’t be surprised if we see interest rates coming into the 5s by summer.
5. Inventory Will Not Grow Significantly- it’s still well below average and below demand
6. There will be No Buyer’s Market, But a More Balanced Market- Sorry buyers, there will be no panic selling.
7. Sellers must become more Realistic- The days of selling a home before the sign is in the yard are behind us.
8. New Construction Activity Will Not Increase - I can go on for hours about this one, call me if you want to talk about it.
9. Employment and The Labor Markets Can Change Everything - Right now unemployment is low, keep an eye on these numbers.
10. Affordability will continue to be The Biggest Issue- Denver homes’ value increased well and above wages, and the higher interest rates on lending don’t help.
