Updated national and Scottsdale real estate market 2023

As we are at mid 2023, it is becoming ever more important for people in the real estate market to stay up-date on current trends. With that said let's have a better look at what potential changes could be seen over the rest of the year with respect to home prices and overall housing conditions.

The Federal Reserve has been increasing interest rates to tackle inflation. This decision is actually making a big impact on how affordable and in-demand homes are for homeowners. So, what does this mean for the real estate market in the future? Let's find out what's in store for the coming months and years!

In this blog post you will find all of these details along with some other factors that may influence how well your real estate investment(s) fare in future markets - whether you’re just starting out or already own one or more properties yourself. Doing your research now can go a long way towards helping ensure success down the line; so let's dive right into our National Real Estate Market Update for 2023!

2023 Real Estate Market Predictions

crystal ball with fortune teller

It's clear that the real estate market is constantly shifting, and 2023 will be no different. As of now, it looks like there might be some recovery from the pandemic-driven downturns in 2022 and 2023 across America. It could mean even more growth next year with people deciding to move out of cities towards suburban or rural areas for better affordability and lifestyle options.

Real estate pros forecast continued competition between buyers this coming year as inventory remains very low in most areas throughout the United States. The Federal Reserve's implementation of interest rate increases to fight inflation has had a substantial influence on homeowner affordability and demand. What does this entail for the real estate market in the months and years to come, though?

Top Trends Impacting Home Prices

3 factors why Scottsdale home buyers have stopped buying

Staying informed on the latest trends in real estate can help you make more educated decisions. Home prices are influenced by a variety of factors, such as economic development and consumer confidence. Economic growth is one major factor that affects home price appreciation - for example, cities with an upsurge in technology jobs will see an increase in housing costs due to competition from people wanting to pursue those opportunities.

Additionally, when people feel secure about their financial future they tend to invest in bigger properties; conversely, low consumer sentiment leads them towards more economical options which eventually reduces house values across America. This means monitoring changes in consumer sentiment plays a crucial role while predicting current market forces related to property value.

Mortgage interest rates also play an important part; lower mortgage rates enable individuals to borrow money at reduced cost -- driving up demand and thus increasing total expense associated with buying or selling houses throughout any particular area or region. Therefore it's essential to keep track of fluctuations in these variables before forging ahead into 2023 and beyond.

The weather isn’t the only thing that heats up in the spring and summer. Nationally, it tends to be the busiest time in real estate. But this year, the peak season got off to a slow start, with sales declines in both March and April. Existing home sales in April were down 3.4% from the previous month—and 23.2% from a year earlier.

Buyers were expecting prices to crash. I have a buyer that is waiting for a 20% decrease. In many areas, prices are still holding from the small declines they saw in the Spring, and in some areas, such as certain towns in the Phoenix area, prices are going back up. Scottsdale real estate is increasing - by small amounts - but still an increase. There is no crash happening there.

With that said, continued near-record home prices (even in areas where they have dropped), high mortgage rates, and a lack of inventory are a few reasons why the market is slowing down. Even if prices aren't going down in some areas, sales are dipping almost everywhere.

Regional Housing Market Differences

The national real estate market in 2023 has certainly gone through a lot of changes. An interesting development is the regional housing markets which can vary drastically depending on where one resides.

U S map with houses on it

In areas such as the Midwest and Northeast, prices remain relatively stable due to factors like slower population growth and lack of economic opportunities compared with other parts of America. New home construction was put on pause for some time during 2020-2021 because pandemic-related supply chain disruptions caused material shortages but it appears that things are back up again now.

Contrary to this, states like California or Florida have seen huge price increases along with increased competition amongst buyers who wish to call these places their homes; likely due to people relocating from out-of-state looking for more affordable alternatives than what they had before. This immense demand has artificially created higher prices since there simply aren't enough homes available - known by many as a 'seller's market'. You'd think with slower sales we'd still be in a buyer's market, but in popular places, it is still leaning toward sellers.

Home sales are attempting to recover and are extremely sensitive to changes in mortgage rates, according to Lawrence Yun, Chief Economist of the National Association of Realtors (NAR). The fact that starter homes frequently receive several offers, however, suggests that greater supply is needed to completely meet demand.

Industry professionals, though, are upbeat about a potential recovery. Home sales are expected to remain in decline through the third quarter before improving in the fourth quarter and beyond, according to predictions from the Mortgage Bankers Association (MBA). The market will start to rebound in early 2024, according to Fannie Mae analysts who predict a slightly longer recovery period.

Effects on Buyers and Sellers

The national real estate market update for 2023 has sparked a mix of responses from buyers and sellers. On the one hand, lenders are creating new financing options to allow buyers to qualify. Sellers are more accommodating by allowing home inspections and making repairs, offering buyer concessions, working with low appraisals, offering home warranties, and more. Even though it is still a Seller's Market, only the best homes in their price range are seeing multiple offers. A buyer might have a better chance at a home that isn't the best one on the market.

Sellers also feel this uneasiness emanating from the current situation too. Many sellers are staying in their current homes even if they really would like to move up. It's very difficult for them to give up their current low interest rates to double them just to get a larger, more expensive place. That might not be as big of a concern for someone downsizing, and many people doing that are able to purchase a smaller, less expensive home with cash.

Personally, when I saw such low interest rates that shocked and surprised me, I knew this day would come. Even if people didn't purchase a home in the past few years when those low rates were in force, many homeowners with mortgages that had no plans on moving refinanced at the low rates. So there is a large population of owners with low interest rates throughout the nation.

Buyers might have to change what they thought they'd get for their budget. They might have set their sights on a single-family home, but with prices and today's higher interest rates, they are now in condo territory. I would rather own a condo vs. renting a place, but some buyers don't want to go that route, especially when they had other plans.

Collage of a Cave Creek house next to a Scottsdale townhouseSome homebuyers might have to accept purchasing a condo vs a single-family home

Sellers need to find an agent with experience that will tell them the facts about today's market. Do you realize that many agents got licensed when rates were low and sales were high? Those agents have never had to deal with a market like we're in today. All they had to do for a listing was take some photos, write up a quick description, put it in the MLS, put a sign out front, and wait for the stampede of potential buyers and multiple offers.

Sellers need to understand that this is not the market of 2020 up to the very beginning of 2022. If they want multiple offers they need to price their properties correctly compared to the competition. If they want multiple offers they'll need to make their homes stand out from the crowd. This might require repairs, updates, and staging.

Sellers will also have to expect buyers to ask for a home inspection and request repairs. Some buyers will ask for financial concessions from the seller, either by asking for help with closing costs and/or rate buydowns. In the past, buyers were paying for their own home warranties, but sellers will probably see those requested in the offer. A buyer might walk away if the home doesn't appraise vs. making up the difference like in the past. Buyers won't be so agreeable to seller demands, like asking to stay past the closing date, even if the seller offers to pay rent.

Preparing for Future Market Shifts

As we look into the future of national real estate, it's essential to think about how best to prepare for any changes that may come. Knowing what potential shifts are ahead and their effect on real estate investments is one key factor in planning properly.

real estate property market sign with a little Scottsdale home, coins, a calculator and a contract

By 2024, many trends from previous years will still be shaping the market: low inventory keeps prices high as buyers compete while mortgage rates are also higher. Some people were predicting we would be seeing an influx of short sales and foreclosures in this slowing market. But most homes in the U.S. have seen equity increases that are high enough to prevent owners from losing their homes to foreclosure. If there is a reason that a homeowner is unable to make their mortgage payments, like job loss or medical issues, they have to do something to avoid foreclosure. I would always recommend selling the property before losing it. Then you'll have cash in hand and your credit won't be affected as much.

Aside from these considerations, scrutinizing broader economic factors such as unemployment levels & inflation data when evaluating likely market movement during 2023 & after would also be wise - increasing joblessness means fewer people capable of buying homes while higher inflation leads consumers to feel less confident about spending money, which influences housing sales all over America.

In conclusion, 2023 looks to be an interesting year in the real estate market. The National Association of Realtors® (NAR) is seeing a loss of agents. I've read predictions of around 3% of agents will give up their licenses. With that said, there was a record amount of agents in the past 1-2 years, so it seems that things are evening out. Club Wealth states that 87% of agents fail in their first five years, so it's always a revolving door and always has been.

Home prices are predicted to go up but at a less rapid rate than in recent years and there will be regional differences as well. The rental industry is also expected to remain buoyant due to high demand for housing persisting above the availability of supply. Therefore, it is vital that buyers and sellers both stay on top of updates about the real estate markets so they can make wise decisions when buying or selling property. How educated you are about the latest market trends has a great impact on your financial decisions!

And I can help you with all of this. I will inform you of current market facts whether you are a buyer, seller, or both. I will share my list of great lenders, home inspectors, title companies, home warranties, etc. If you're selling your home, I have an all-encompassing marketing plan with national and international advertising, professional photography, a website just for your property, and more. Call or text me at 480-906-1500 or use the Contact Form.

Posted by Judy Orr on
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