WASHINGTON, D.C. – (By Dale King, Realty News Report) – Dallas and San Antonio are expected to be among the top performing realty markets in 2023, according to a forecast by Lawrence Yun, chief economist for the National Association of Realtors during NAR’s fourth annual, year-end Real Estate Forecast Summit delivered via Zoom on Tuesday.
“The economic conditions in place in the top 10 U.S. markets, all of which are located in the South, provide the support for home prices to climb by at least 5 percent in 2023,” said Yun.
Markets that NAR expects to outperform other metro areas in 2023 include:
2. Raleigh, N.C.
4. Fayetteville, Ark.
5. Greenville, S.C.
6. Charlestown, S.C.
7. Huntsville, Ala.
8. Jacksonville, Fla.
9. San Antonio
10. Knoxville, Tenn.
Yun said NAR selected the top 10 real estate markets to watch in 2023 based on how they compared to the national average on the following economic indicators:
- Better housing affordability.
- Greater numbers of renters who can afford to buy a median-priced home.
- Stronger job growth.
- Faster growth of information industry jobs.
- Higher shares of the information industry in the respective local GDPs.
- Migration gains.
- Shares of workers teleworking.
- Faster population growth.
- Faster growth of active housing inventory.
- Smaller housing shortages.
In his opening remarks, Yun predicted that 4.78 million existing homes will be sold, prices will remain stable, and Atlanta will be the top real estate market to watch in 2023 and beyond.
The home sales figure represents a decline of 6.8 percent compared to 2022 (5.13 million) and the median home price, he said, will reach $385,800 – an increase of just 0.3 percent from this year ($384,500). His suggested price point for the coming year comes on the heels of a 9.6 percent gain in 2022.
“Half of the country may experience small price gains, while the other half may see slight price declines” in 2023, Yun said. “However, markets in California may be the exception, with San Francisco, for example, likely to register price drops of 10–15 percent.”
Yun also said he expects rent prices to rise 5 percent in 2023, following a 7 percent increase in 2022. He predicted foreclosure rates will remain at historically low levels in 2023, impacting fewer than 1 percent of all mortgages.
While most of Yun’s report was neutral or slightly negative – “vanilla,” as one panelist noted — he did hit a major positive note when he compared the current housing situation to that resulting from the 2008-09 recession. Right now, he noted, conditions are nowhere near as bad as they were just over a decade ago.
He noted that 8 million jobs were lost in 2008 while practically none have been lost this year. Home foreclosure numbers then were significantly higher than now, as were mortgage deficiencies. And while the inventory of available homes is up now to around a million, the 2008 figure said 3.8 to 4 million residences were sitting idle and unsold.
Yun also forecast U.S. GDP will grow by 1.3 percent, roughly half the typical historical pace of 2.5 percent.
And after jumping to 7 percent in late 2022, he said he expects the 30-year fixed mortgage rate to settle at 5.7 percent – at least by the latter part of 2023 — as the Fed slows the pace of rate hikes to control inflation. Yun noted this is lower than the pre-pandemic historical rate of 8 percent.
Ironically, one day after the NAR webinar, the Federal Reserve raised short-term interest rates by a half percentage point. The rate hike announced Wednesday brings the Fed’s benchmark policy rate, the federal funds rate, to a new range of 4.25 to 4.5 percent, the highest level since December 2007.
Houston home sales declined late in 2022. The Houston Association of Realtors reported 5,827 single-family homes sold in November 2022, down 30 percent from 8,374 sales in November 2021.
Dec.15, 2022 Realty News Report Copyright 2022.
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