At Home with Gary: South Florida Real Estate Predictions for 2023
By Gary Lanham | Collaborating columnist
If the COVID and post-COVID era has created some interesting times, 2023 promises to be just as challenging – or exciting – depending on your tolerance for the unknown.
Below are 12 predictions for the coming year. . .
1. Home prices will hold up in 2023. A shortage of homes in South Florida, combined with homes still selling at record highs, is resulting in high prices. House prices will rise 3-4% due to low inventory levels. While people have paid too much for homes in the past two years just to get in, buying a home will be an even smarter call in the coming year than during COVID.
2. House inventory will decrease. The dilemma for Florida landlords is clear: If I sell, where will I move? Only owners forced to sell due to life events – divorce, death, recession and unemployment – will be motivated to sell. Others will stay put, putting downward pressure on stocks.
3. Foreign investors are returning to Florida. Political and economic instability and uncertainty in Latin America will continue to cause capital flight to the United States, and in particular South Florida. Lenders who have the money will be eager to lend, catering to the needs of foreign nationals looking for a mortgage.
4. Fixed and reversible home activity will slow in 2023. The high cost of real estate, coupled with inflation and ongoing supply chain issues, will drive these investors out of the market as profitability declines.
5. Mortgage interest rates will drop. It’s curious how sometimes when the Fed raises the Federal Reserve rate, mortgage rates can drop. After unprecedented rate hikes over the past year, the Fed has signaled that rate hikes will slow in 2023. Rate hikes will end up in a 5% range by the end of the year, soothing concerns of borrowers and stimulating the enthusiasm of buyers.
6. The number of real estate transactions will drop. The year 2022 has seen up to 25% less real estate transactions than in 2021. The year 2023 will have even fewer real estate sales than in 2022, as the market finds its equilibrium.
7. Rental demand will grow. The decrease in real estate transactions and the low inventory for sale will fuel the growing rental demand. This will lead to further increases in rental rates, which are expected to increase by up to 13% for the year. The interest on the rent is 100%, which means that you receive nothing for your rent. You pay off your landlord’s mortgage, and at the end of your lease, you own nothing. . . so you might as well pay 100% interest.
8. Investment properties will return to the market. These properties, particularly Airbnb and other rental properties, will begin to hit the market as investors recognize lower returns due to increased supply and lower short-term rental rates, as well as higher taxes and insurance premiums on non-family properties, and as consumers become more cautious about their spending in a dodgy economy.
9. Fewer home buyers. High home prices, coupled with higher interest rates and, again, economic uncertainty surrounding their budgets and incomes, will dampen buyer enthusiasm. First-time home buyers who decide to buy will be pushed into less desirable areas.
10. Vendor concessions will increase. The days of “as is” home sales and canceled home inspections are over. Fewer buyers, coupled with higher inventory, will induce seller concessions, such as inspection report repairs, mortgage rate buyouts, and other creative ways to stand out from other real estate listings . Buyers don’t care about the interest rate or the sale price; buyers care about their monthly payment.
11. People age 62 or older will be looking for creative cash flow. Seeking a better, more stable retirement, seniors will explore ways to eliminate mortgage payments, increase cash flow, and leverage their current residence to live in their dream home with reverse mortgages or other options.
12. Say goodbye to the old owners of Fort Lauderdale. Seniors and retirees tired of the area’s congestion — and hoping to capitalize on home values — will cash in and move north. They will stay in Florida, but head to places like Stuart, Port St. Lucie, Vero Beach and The Villages.
If you’re hoping to list and sell your home, the right realtor can help. As the Gary Lanham Group Team Leader at Coldwell Banker Real Estate Fort Lauderdale Beach Office, Gary is a seasoned listing agent skilled in the most complex transactions. It helps sellers get the most money in the least amount of time. Contact him at instagram.com/garylanhamgroup or 954-695-6518.