The midyear housing market outlook and predictions you should know.

What happened to the real estate market in the first six months of 2023, and what can we expect in the second half of the year? Today I’ll share an outlook on our market and also discuss some of my real estate predictions.

The two main factors affecting the market are inventory and interest rates. Inventory levels are at an all-time low, with active listings reaching historic lows. This trend is observed not only nationwide but also in specific areas like San Diego, where inventory is substantially lower than usual.

The low inventory can be attributed to the prevailing interest rates. Currently, obtaining a new mortgage comes with an interest rate of around 6.5% to 7% for a 30-year fixed mortgage. However, the majority of existing mortgage holders still have rates below 6%, and a significant portion even below 4%. This situation has led many homeowners to hold onto their properties rather than sell and face higher costs for moving up or down in the market.

“Prices will likely continue to rise in the coming months.”

As a result, the number of homes sold and closed transactions in May decreased by approximately 26% compared to the previous year. This decline has not only affected real estate agents but also various related industries like home improvement suppliers. Home Depot, for instance, saw its first sales decline in over a decade.

Regarding property prices, there has been a 3.5% decrease year over year, but it's important to consider that this dip might be influenced by the end of the previous year's relatively good interest rates. Going forward, it's expected that the year-over-year price comparisons will show a spike, as current interest rates are becoming the norm, leading to fewer transactions but driving prices up due to limited inventory.

Looking ahead, prices will likely continue to rise in the coming months. The possibility of interest rate fluctuations could influence demand and potentially release some of the inventory backlog. 

If you have any real estate questions or need further information about the market, feel free to call or email us. We’re happy to share our insider knowledge with you.