Agent: My 2023 Real Estate Prognostications
What Lies Ahead.....
There is no doubt that 2022 ended in quite a dud for the real estate industry. Once the interest rates began to rise in Summer 2022, it definitely put the reins on the end results for 2022.
For this law firm (which I imagine would be very similar to most of those who are reading this newsletter), the amount of closings through August was actually greater than 2021. That's right: 2022 was better than 2021 through August. However, once the interest rate increases began to take hold, we saw September, October, November and December really drag down the rest of 2022. In fact, due to the interest rate impacted Fall, the 2022 year actually ended up behind 2021 at the end of the day. Pretty astonishing considering where we were at through August.
So, what lies ahead for 2023?
There is no doubt we have some solid wind at our back now:
Supply is still limited. As you know, when good product hits the market, it gets eaten up quickly;
Most buyers have finally got used to 6% interest rates. They are no longer a shock to the system. And, historically, 6% is still under the rolling average 30 year mortgage rate (if you look over the last 50 years or so);
The repressed Fall has some anxious buyers finally back in the market to satiate their desires after being scared off in September, October and November
Buyers are anxious to lock in now, in fear of rising interest rates (especially if they are in the market to buy this year)
The January weather has been astonishingly pleasant, leading more people outdoors and more likely to shop for housing
However, there are still headwinds as well:
Interest rates are 6%, not the 3% that everyone got used to
Many, many, many buyers already bought during the pandemic and they are not going to buy/sell again since that itch has been scratched for the foreseeable future
Prices have not come down that precipitously to induce a buying frenzy
So, what do we think lies ahead?
We believe the January through August volume of last year will be down roughly 25%. In other words, the frenzy is over, but the typical Spring/Summer Chicago rush will still be present, albeit about 25% less than last year's volume....not bad at all
We believe, barring a catastrophic interest rate increase during the year, the Fall market (defined as September through November) will be at least 25% more than last year's depressed Fall
So, we think 8 months will be down 25% and 4 months will be up 25%, and, in essence, we view 2023 to be about 8% less than 2022 volume. Basically, we believe that the 2023 market will be much more robust than most are predicting
If you are looking for another attorney partner for 2023, or you simply want to have a great backup option for your current attorney, please keep us in mind. We want to help you achieve your 2023 goals.
To Your 2023 Success,
David Frank, Managing Member
The David Frank Law Group