As we come to a close on 2022, I feel that the “rate shock” that slowed the
residential market in the last half of the year will gradually ease in 2023.
Since mortgage rates are tied to the 10-year U.S. Treasury bill rate, they reflect
the trajectory of anticipated inflation. Whether through a recession or continued
monetary tightening by the Federal Reserve Bank, the rate of inflation will most
likely fall during the first two quarters of next year.
I expect that the traditional 30-year fixed rate home mortgage will be around 5%
by mid-year 2023. The structural issues in the residential market that exist today
— demand for housing outstripping the supply — will continue throughout the
new year and perhaps get worse as lower mortgage rates will drive more buyers
into the market.
All that to say — housing prices will likely increase by about 10% in 2023.
Happy Holidays!
Bill Adams, MBA, CCIM, CRB, ALC
Adams Realtors