Real Estate Trends in 2023
Whether you've been considering buying a house, selling your property, renting, investing in a vacation home—or just watching the market—keeping an eye on real estate trends is an important part of staying educated. In general, real estate professionals and industry experts largely expect 2023 to see some kind of return to normalcy. And even though mortgage rates and home prices are expected to settle to pre-pandemic levels, lower demand and a limited inventory of homes for sale may create a lukewarm market.
Keep reading for more on our predictions and forecasts going into 2023.
Top national real estate trends in 2023
After a volatile past two years, the 2023 real estate landscape is expected to return to relatively normal levels. Here’s our take on market conditions, mortgage rates, inflation, and strategies for both buyers and sellers.
Will 2023 be a buyer's or seller's market?
For the past two years, it's been a seller's market. That means there was high demand for homes, but limited inventory (due to a variety of factors, most notably pandemic-related demand, competition, and construction issues). But in 2023, the market is expected to be more balanced—with slightly higher inventory than what we've seen recently, and prices gradually stabilizing. That means buyers might have better luck finding a home that fits their budget.
What will happen with mortgage rates?
If you've been thinking about buying a home, you've probably already been paying close attention to rates. After roughly doubling in 2022, high interest rates might make you feel like now is not the right time to buy a home—but that's not necessarily true.
Although not at the same record lows we saw in 2021 and early 2022, rates are now starting to creep up. Some experts predict rates will eventually stabilize anywhere from 5.5% to 8.5%. Depending on your unique circumstances and financial goals, a certified professional can help you put together a plan. Working with a real estate agent is a great first step in deciding if the timing is right for you to buy, sell, refinance, or get creative with something new.
Is inflation impacting real estate?
The short answer is yes. But the ways in which inflation impacts housing prices depend on a variety of factors, most of which can vary between state, county, or even city.
The biggest way that inflation affects real estate is by influencing both the cost of living and wages. Generally, increases in one will lead to a corresponding increase in the other. In this scenario, a higher cost of living results in higher wages, leading to increased spending power—and often, more real estate purchases. This is usually more common in urban areas and bigger cities where high-paying jobs can continue to offer salaries that support higher housing costs.
To put it more simply: if wages are rising faster than home prices due to inflation, buyers may be able to get more for the same amount of money—thereby driving up demand and ultimately increasing prices in the long term. On the other hand, if home prices rise at a rate that exceeds wage growth, demand will be lower since buyers aren’t able to pay the higher costs associated with those homes.
Will housing inventory increase?
On the topic of housing inventory in 2023, experts' opinions vary. Homeowners who purchased their houses with low interest rates are unlikely to switch to a loan with higher interest—unless they absolutely have to—which would mean fewer houses being listed for sale.
At the same time, those high interest rates may make homes less affordable in 2023, contributing to a rise in available inventory as people look to move or downsize.
Real estate trends in Sun Valley, Idaho for 2023
In Idaho and Sun Valley, we can expect similar trends as what we see nationally—but with some localized exceptions. For starters, since our area is known to have a higher proportion of second-home buyers, local residents may not feel the same impact from inflation as other parts of the country.
That being said, the Wood River Valley's recreational lifestyle may continue to draw people away from urban areas as folks seek more space and outdoor activities. This could further drive up demand and make it even more difficult to find an affordable house.
The surge in demand for vacation homes and short-term rentals could also mean good news for existing homeowners. With careful planning, those in the area could potentially take advantage of this trend by renting out their homes for additional income.
Conclusion
2023 looks to be an interesting year for real estate, with many promising trends emerging on both a national and local level. For anyone considering buying or selling property in the near future, now is the time to plan accordingly. With the help of a specialized team, you can make sure that your real estate goals are in line with the changing market environment.
At the end of the day, it’s important to remember that when it comes to real estate trends, there’s no one-size-fits-all approach. By understanding both the macroeconomic factors and localized nuances of your area, you can better prepare yourself for whatever surprises may arise ahead.
Considering property in the Sun Valley, Idaho area? Contact us today to learn more about our local real estate trends, opportunities for homebuyers, strategies for finding the perfect property, and more.
For buyers or sellers in markets outside the Wood River Valley, we’d be happy to connect you with a trusted agent wherever you are looking to purchase. Please reach out to get in touch with our team.