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An annual report from the Counselors of Real Estate outlines several of the most pressing topics that could affect the housing market in 2023.
The member survey unveiled the top five issues affecting real estate in the next year:
• Inflation and interest rates. It should be no surprise that rising costs due to record-high inflation and increased interest rates have created barriers in the housing market. Mortgage rates have more than doubled in the past year and inflation is at a 40-year high, hovering around 7.7 percent.
Both rates have increased substantially from their historic low levels at the beginning of 2022, but have tapered, rather than increased, over the last few months. In an effort to control the rate of inflation, the Federal Reserve has raised interest rates six times in 2022.
However, October’s rate of 7.7 percent coming in below projections could be a positive indicator that the economy is stabilizing. Generally when inflation is low, mortgage rates tend to be lower. There is no question that a realignment is occurring in the housing market. However, without a drastic decrease in demand, we are unlikely to see a recession.
• Geopolitical risks. Nearly three years after the firstCOVID-19 case was reported, we are still dealing with the economic ramifications. Workforce and supply shortages continue to raise the cost of goods and services. At the same time, global unrest in countries such as Ukraine and China have created both social and economic challenges, which are causing strain to the housing market.
• Hybrid work models. As the ability to work remotely grows, so does the demand for larger homes. Surveys have shown that workers prefer to work remotely at least one day per week and many businesses have experienced cost savings and increased productivity from hybrid work models.
This change in consumer and business preferences affects both the residential and commercial side of real estate as shifts are made away from urban centers. Locally, we have seen this shift in Carroll County. Out of the tri-county service area of STAR, we have seen the most increase in demand and increase in housing prices in Carroll County.
• Supply chain disruption. Shortages in labor and lumber continue to delay new-home construction and home repairs.
• Energy. There is a growing demand for alternative energy. Sustainability is playing a larger role in new construction and retro-fitting of commercial and residential dwellings. Implementation of green energy can be effective, but costly.
The real estate industry is no stranger to change or shifting markets. It is important for potential and current buyers to be aware of these concerns, but not disheartened. An experienced Realtor will not only navigate the murky market, but chart the best path forward for you.
To learn more about the power of the Realtor brand, visit our website https://www.star.realtor/why-use-a-realtor
Marlin Palich is the 2022 president of the Stark Trumbull Area Realtors. Visit www.star.realtor for a complete listing of Realtors and affiliate members. Send questions or comments to info@star.realtor.
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