Spring Market Trends Report 2023

Triad Average home Prices

year to date comparison (December 2022) Triangle average home prices

In like a lion

AND OUT LIKE A LAMB

While this title is generally used by the Farmer’s Almanac to depict severe weather changes, it seems apropos. 2022 was extreme. Driven by the combative forces of ever-increasing mortgage interest rates, low unemployment, low housing inventory and early high demand, we witnessed real estate market swings that spooked a lot of folks.

Take the two largest markets we serve, Triangle and Triad. In these two large metropolitan areas, we're experiencing average price increases. But as this year progressed and as mortgage interest rates continued to rise, we did see a decline.

TRIANGLE

While those two charts looked somewhat tame, they are missing two points of context:

The 2022-year-end average sales prices are a decline over the mid-year average sales price

The high for Triangle was $486,327 in May 2022 (a decline of about 5.5% from the high)

The high for Triad was $301,792 in June 2022 (a decline of about 7.2% from the high)

Mortgage interest rates nearly doubled during 2022

The average 30 year fixed rate mortgage was about 3.22% at the beginning of 2022

The average 30 year fixed rate mortgage was about 7 08% in November of 2022

And none of these large swings occurred in a vacuum. As inflation soared and the Fed Reserve adjusted the Fed Funds Rate upward 7 different times throughout 2022 to quell all prices, consumer confidence in housing began to wane, consumer affordability declined, and housing stumbled.

The above is what nearly all our markets (including Goldsboro, Lake Gaston, Kerr Lake, and Mt Airy) experienced. But that was 2022. 2023 is a time for anew!

A Return Towards Normalcy

2023 should prove to be a return towards ‘normalcy’ – defined as a market void of the extreme unpredictability of 2022. Let’s look at some very basic trends:

Mortgage interest rates have pulled back from the highs of last November As of this writing, a 30year fixed rate mortgage has declined to just below 6%. And this recent decline, driven by the performance of the 10-year bond market is likely to remain or decline further.

Fannie Mae is forecasting that the average 30-year fixed-rate mortgage will remain stable and then hover around 6% later in 2023

Freddie Mac is forecasting a stable rate of about 6.4% (a higher forecast than most)

The Mortgage Bankers Association is expecting rates to remain stable initially and then drift down to about 5.7% by year’s end National Association of Realtors®’ Chief Economist, Lawrence Yun, also expects mortgage rates to settle at around 5.7% for a 30-year fixed rate mortgage Not a single large national mortgage entity expects rates to drastically increase in 2023.

Home Prices, while down from the highs of mid2022 are expected to stabilize or grow slightly in 2023.

Realtor com is bullish Their Chief Economist, Danielle Hale, is projecting a 5.4% national average increase in existing home sale prices.

CoreLogic’s interim Chief Economist, Selma Hepp, stated recently that their data is pointing to a flat home price increase (i.e. 0% increase) in the spring of 2023

And NAR’s Lawrence Yun presented his thoughts on prices in the following way; “after a big boom over the past two years, there will essentially be no change nationally in home prices in 2023. Half of the country may experience small price gains, while the other half may see slight price declines” Yun went further to offer a 2024 forecast/prediction of average price increases of 5%. What’s important is that the major real estate-focused entity forecasts all trends to a flat or increase in home sale prices; not a decline.

not a single large national mortgage entity expects rates to drastically increase in 2023.

entity forecasts all entity forecasts all trend to a flat or trend to a flat or increase in home increase in home sale prices; not a sale prices; not a decline. decline.

Market Predictions

National home sales forecasts for 2023 still suggest a further decline driven by continued inventory shortages that were recently exasperated by national reduction in builder confidence and activity when rates increased dramatically last year.

Fannie Mae’s 2023 forecast of total home sales drops to 4.5 million from 2022 levels of 5 7 million In full context though, the 4.5 million forecast is actually an increase from the 4 million forecast for 2023 that Fannie Mae produced this past October Likewise, Fannie Mae’s 2023 existing home sale forecast (sans new home sales) was upwardly changed to an annualized rate of $4M (which is still down from the $5 1M of 2022)

NAR’s 2023 forecast of existing home sales (not including new homes) is slightly more aggressive predicting 4.78 million sales down from 2022’s 5.1 million Or roughly a 7% decline in existing home sales.

The thing to note in each of their forecasts is that the rate of sales is expected to increase throughout 2023 (starting slower and building higher).In fact, Fannie Mae’s 2024 existing home sales forecast is 4.6 million or 15.6% increase over 2023. And NAR’s prediction is a growth of about 5 2 million existing home sales in 2024. The predictions point to a slow but continued strengthening in housing as time progresses

Market Impact

what impact does this have on the market?

And what does this all mean for all of our markets (Triangle, Triad, Goldsboro, Lake Gaston, Kerr Lake, Mt Airy and all of their surrounding municipalities)? How are we going to fare?

To avoid being accused of irrational optimism, I would point you to NAR’s recent study of the top 10 markets to watch in 2023. Using factors such as:

Better housing affordability

Greater # of renters who can afford to buy a median-priced home.

Stronger job growth.

Faster growth of the information industry in the respective local markets.

(Full list right)

The Top 10 Markets To Watch

Atlanta-Sandy Springs-Marietta, Georgia

Raleigh, North Carolina

Dallas-Forth Worth-Arlington, Texas

Fayetteville-Springdale-Rogers, ArkansasMissouri

Greenville-Anderson-Mauldin, South Carolina

Charleston-North Charleston, South Carolina

Huntsville, Alabama

Jacksonville, Florida

San Antonio-New Braunfels, Texas

Knoxville, Tennessee

NAR's Market

Determining Factors

Better housing affordability.

Greater # of renters who can afford to buy a median-priced home.

Stronger job growth

Faster growth of the information industry in the respective local markets

Higher shares of the information industry in the respective local markets

Migration gains (people moving in)

Shares of workers telecommuting

Faster population growth

Faster growth of active housing inventory

Smaller housing shortages (which means there are many national markets with tighter inventory levels than our own markets)

[Each of these markets has microeconomic factors where] “the demand for housing continues to outpace supply,” per Lawrence Yun of NAR. “The economic conditions in place in the top 10 U.S. markets, all of which are located in the South, provide the support for home prices to climb by at least 5% in 2023.”

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So what does all of this mean to you?

Keeping abreast of the real estate market as a current or prospective home owner is important. Knowledge of macro and micro economic forces and the data driven predictions from those committed to the industry help create a framework for your housing decisions. But these are only part of the overall considerations for deciding what to do next. The single largest driver of residential real estate sales is lifestyle change There are all sorts of lifestyle decisions made every day that cause someone to sell or buy a home. It could be families getting larger, families getting smaller, work-life balance, relocations, divorces, medical needs, personal investment opportunities, new jobs, new opportunities, or simply the desire for change. But those drivers are very personal to the individual.

And it’s here at the intersection of those personal wants and needs where we all have a passion for what we do. Every single Coldwell Banker Advantage agent subscribes to doing business the CBA Way The CBA Way is centered on a few core principles:

Put the client's needs first.

Treat others how you wish to be treated

No tolerance for discrimination of any form.

Get involved with the community.

Always disclose – trust is the hallmark of our brand.

Never hesitate to ask a question – guessing does not serve our clients well.

"The single largest driver of residential real estate sales is lifestyle change."

We hope you found this information helpful. And if you have any questions, please don’t hesitate to reach out to your local Coldwell Banker Advantage agent.

We're Here To Guide you a little about us...

Coldwell Banker Advantage agents are the most knowledgeable in the Triad and Triangle markets. The unparalleled training and support they receive from CBA make them the most suitable to navigate you in your real estate endeavors. Find a CBA agent in your area at CBAdvantage.com/Offices

This article was written by Rick Gregory, President & Partner at Coldwell Banker Advantage.

Rick Gregory Coldwell Banker Advantage LinkedIn com/in/rgregory

President & Partner

Coldwell Banker Advantage is part of the Coldwell Banker Advantage family of companies with approximately 1900 agents, 57 offices, throughout the Triangle, Triad, Lake Gaston, Kerr Lake, Fayetteville and Southern Pines & Pinehurst, Wilmington, New Bern and Myrtle Beach marketplaces The Coldwell Banker Advantage family of companies served approximately 24,000 clients representing more than $7 Billion in residential real estate sales in 2021.