A Reflection on the 2023 Real Estate Landscape

As we bid adieu to 2023, let’s take a moment to unravel this year’s real estate market. This blog will rehash market fluctuations, interest rate dynamics, and the National Association of Realtors (NAR) lawsuit. 

Market Fluctuations: According to a trusted industry source, CoreLogic in their December 2023 insights report, while demand for single-family homes remained high, inventory shortages persisted, creating a competitive landscape for prospective buyers. Home prices increased by 4.7% from October of 2022 to October 2023, while some months experienced a smaller percentage rate change.  

Interest Rates:  In 2023, homebuyers faced record-breaking interest rates due to the Fed’s continuation of federal funds rate increases at their Federal Open Committee Meetings. Since May of 2023, the target range is at 5% – 5.25%. The current hike in interest rates is not completely new to our economy as we have experienced similar rates in the 70’s and 80’s. It was not until the 90’s that homebuyers saw interest rates under 7% again. Rocket Mortgage does a nice job summarizing historical rates through the various decades since this data has been tracked. 

$2B NAR Lawsuit: Big news in the industry is the lawsuit involving The National Association of Realtors that could potentially change the home buying experience as we know it. Things like buyer representation, commissions, and the settlement of closing costs are all up for discussion after allegations of anti-competitive practices and concerns over transparency. This case has not yet been settled but in the meantime has created lots of noteworthy conversation within the real estate industry. 

Predicted Areas of Growth in 2024: While the economy and interest rates remain uncertain, there are a handful of markets that are predicted to see growth in the coming year. Realtor.com has listed these areas as promising areas to look forward to in the new year. We have listed them here for your convenience: 

1. Toledo, OH: Forecasted home sales change: 14%
2. Oxnard, CA: Forecasted home sales change: 18%
3. Rochester, NY: Forecasted home sales change: 6%
4. San Diego, CA: Forecasted home sales changed: 11%
5. Riverside, CA: Forecasted home sales change: 13.8%
6. Bakersfield, CA: Forecasted home sales change: 13.4%
7. Springfield, MA: Forecasted home sales change: 10.5%
8. Worcester, MA: Forecasted home sales change: 9.1%
9. Grand Rapids, MI: Forecasted home sales change: 6.1%
10. Los Angeles, CA: Forecasted home sales change: 9.2%

 

We’ve experienced a lot of change in 2023. Homebuyers who were used to low interest rates are now facing a new reality. Real estate agents could be facing a new reality of their own with the outcome of the NAR lawsuit. What’s next for 2024? Looks like there are a multitude of possibilities and undoubtedly, some new opportunities. One way or another, we are hopeful for a healthy and productive new year.