2023 Market Predictions for the DC Metro
Here's my two cents:
Inventory remains historically low which will keep upward pressure on prices. One thing I noticed in November when rates went down for the first time in weeks, was that the drop was immediately followed by a bump in new contracts - a .25% drop brought a 7% increase in new contracts. So buyers are out there waiting. We're already seeing sellers offering incentives like rate buy-downs and that should continue. The big problem in the DC area is lack of inventory so more buyers entering the market could bring back a somewhat competitive market for buyers even at 5%+ rates. I think we'll continue to see fewer transactions through the year because a number of buyers are priced out of the market.
Here's what the economists are saying:
"Half of the country may experience small price gains, while the other half may see slight price declines," Yun said. "However, markets in California may be the exception, with San Francisco, for example, likely to register price drops of 10–15%."
Yun expects rent prices to rise 5% in 2023, following a 7% increase in 2022. He predicts foreclosure rates will remain at historically low levels in 2023, comprising less than 1% of all mortgages.
Yun forecasts U.S. GDP will grow by 1.3%, roughly half the typical historical pace of 2.5%. After eclipsing 7% in late 2022, he expects the 30-year fixed mortgage rate to settle at 5.7% as the Fed slows the pace of rate hikes to control inflation. Yun noted this is lower than the pre-pandemic historical rate of 8%.
Lisa Sturtevant, Chief Economist for Bright MLS (Mid-Atlantic Listing Service)
“We’re actually not seeing an outlook for prices to fall in the Washington area. Our forecast is for prices to be up about 1% year-over-year. The reason for that is we are seeing both side of the market contracting. Both the demand side and the supply side,” Sturtevant said.
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