I couldn't be more excited for a new year in Real Estate! Nothing drastic has changed from Dec 2022 to Jan 2023, however, it's always exciting looking forward to a fresh start and new goals to crush! Last year my husband and I personally set a goal to purchase our first short term rental (think Air BnB or VRBO - these typically get higher monthly cash flow) and I'm proud to say it is thriving! Check it out here! We now have one long term rental ( traditional renting to someone who signs a lease or pays month to month - usually lower monthly cash flow for lower risk) and one short term rental. Our goal in 2023 is to add to our investment portfolio by purchasing another investment home out of state and making it a mid term rental (think 30 day stays or longer, great for traveling nurses - more cash flow than a long term rental and lower risk than a short term rental). 

 

I am not sharing this with you to boast or brag but to show you that not only do I have professional experience with helping clients buy and sell investment homes, I also have personal experience and that it is possible for the everyday person or family to become a Real Estate investor.

 

 

As you know, we currently live in highly inflationary times. What you may not know is that over the past 40 years, Real Estate has been proven to be the number one asset class as a protection against inflation. Whether you're investing for long term retirement income or passive income to cover a few monthly bills, owning rental properties paves an incredible path to finical freedom and I am passionate about helping you get started! If buying a rental property is also a goal of yours this year please don't hesitate to reach out to me! I would be happy to chat options or ideas with you and even connect you with great agents out of state if Oregon is not where you plan to purchase. 

 

5.4% for a VA loan, 6.4% for a conventional loan and 7.1% for an FHA loan. *Rates change daily and are subject to each individual lender/bank. If you need a trusted lender recommendation please don't hesitate to ask. 

 

The 2022 housing market has been defined by two key things: inflation and rapidly rising mortgage rates. And in many ways, it’s put the market into a reset position.

As the Federal Reserve (the Fed) made moves this year to try to lower inflation, mortgage rates more than doubled – something that’s never happened before in a calendar year. This had a cascading impact on buyer activity, the balance between supply and demand, and ultimately home prices. And as all those things changed, some buyers and sellers put their plans on hold and decided to wait until the market felt a bit more predictable.

But what does that mean for next year? What everyone really wants is more stability in the market in 2023. For that to happen we’ll need to see the Fed bring inflation down even more and keep it there. Here’s what housing market experts say we can expect next year.

 

Moving forward, experts agree it’s still going to be all about inflation. If inflation is high, mortgage rates will be as well. But if inflation continues to fall, mortgage rates will likely respond. While there may be early signs inflation is easing as we round out this year, we’re not out of the woods just yet. Inflation is still something to watch in 2023.

Right now, experts are factoring all of this into their mortgage rate forecasts for the year. And if we average those forecasts together, experts say we can expect rates to stabilize a bit more in 2023. Whether that’s between 5.5% and 6.5%, it’s hard for experts to say exactly where they’ll land. But based on the average of their projections, a more predictable rate is likely ahead (see chart below):

 

But we could see rates tick down if inflation continues to drop. 

As Greg McBride, Chief Financial Analyst at Bankrate, explains:

 

In the meantime, expect some volatility as rates will likely fluctuate in the weeks ahead. If we see inflation come back under control, that would be good news for the housing market.

Homes prices will always be defined by supply and demand. The more buyers and fewer homes there are on the market, the more home prices will rise. And that’s exactly what we saw during the pandemic. But last year, things changed. We’ve seen home prices moderate and housing supply grow as buyer demand pulled back due to higher mortgage rates. The level of moderation has varied by local area – with the biggest changes happening in overheated markets. But do experts think that will continue? The graph below shows the latest home price forecasts for 2023.

As the different colored bars indicate, some experts are saying home prices will appreciate next year, and others are saying home prices will come down. But again, if we take the average of all the forecasts(shown in green), we can get a feel for what 2023 may hold. The truth is probably somewhere in the middle. That means nationally, we’ll likely see relatively flat or neutral appreciation in 2023. As Lawrence Yun, Chief Economist at the 

National Association of Realtors (NAR), says:

“After a big boom over the past two years, there will essentially be no change nationally . . . Half of the country may experience small price gains, while the other half may see slight price declines.”

 

The 2023 housing market is going to be defined by mortgage rates, and rates will be determined by what happens with inflation. The best way to keep a pulse on what experts are projecting for next year is to lean on a trusted real estate advisor, like me, of course! If you have any questions, would like an update on the value of your home or curious about the market don't hesitate to reach out to me!