Sherry's Market Predictions for 2023

Sherry Campbell  |  January 9, 2023

Sherry's Market Predictions for 2023

Happy New Year! I imagine that by the end of 2022, everyone was tired of hearing about the
real estate market and just decided to enjoy the holiday season.

This sentiment was reflected in the slow down in home sales. According to the Greater Houston
Partnership article in this newsletter, brokers sold 30% fewer homes in November 2022 then we did the
same time last year. In addition, the average days on the market increased from 30 to 48 from October
to November, 2022.

The writing was on the wall though when the feds increased the interest rates for the seventh
time in one year! This historical climb in interest rates definitely put a damper on our real estate market
the last half of 2022, but as we ease into a new year, I expect the market to normalize again.

Let’s face it—inflation and home prices were going up too fast, and at the rate we were heading,
the average home buyer would not have been able to afford to buy anything. In 2020 to the beginning
of 2022, home prices were appreciating at a rate of 20%-30%, which is 3 times our normal appreciation.

As we eased into 2023, both home prices and interest rates have settled down, so without
taking out my magic eight ball, I expect that the housing market in Houston will normalize this year.

What does normalize mean? Prices should settle back down to what the values should have
been prior to the speculate market that drove buyers to over pay for homes by 15-25% over the last few
years, which could mean that our homes are just not worth as much money today as they were last

Interest rates have already declined slightly going into the new year, and by mid-year, interest
rates are expected to settle into a “normal” range of 5.5%, about 1% lower than what we are seeing

Now if can only see more inventory come on the market so the ready and willing buyers have
better options than some of the homes that have either been overpriced or need too many updates and
are lingering on the market. Sellers may be reluctant to sell their homes if they are sitting on a 3%
interest rate, unless they are being transferred or have another family change that motivates them to
purchase at a higher interest rate.

Going into the new year, Houston is showing a 2.9 month supply of inventory, which should be
seller’s market, but the market will continue to react like a buyer’s market until Sellers adjust their
prices to today’s market.

Overall, I feel that the housing market in Houston will adjust to healthy, strong market this year!

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