To say the real estate market has undergone a lot of changes in the last few years would be an understatement. Fueled by rock-bottom mortgage rates
, 2020 and 2021 saw demand skyrocket along with home prices
. Amid fears of out-of-control inflation, interest rates began increasing in 2022 at a pace never seen before. Increased costs at every turn spooked some buyers out of the market. Sales have slowed
, as has price appreciation in recent months.
All eyes are on 2023. After some serious whiplash over the last two years, buyers and sellers alike are wondering if mortgage rates will finally see a reprieve and if that will reinvigorate the market.
A more balanced market
All signs are pointing to a return to normalcy for the 2023 real estate market. 2021 was characterized by low supply and high demand, while 2022 was known for interest rate increases that have all but put the breaks on buying. Both of these scenarios represented an out-of-balance market.
Looking into next year, there are more homes on the market than there were a year or two ago, but the inventory in Southern California is still very limited
. Some experts have indicated
that supply and demand is just now coming into balance for Los Angeles County, although the Bel Air real estate market is even more specific and limited. As the market comes to a more balanced state, this gives buyers more negotiating power. A more balanced market is good news for those who have been looking to buy a home in the sought-after Bel Air area and have been beaten out recently. If this sounds like you, Desiree Lapin can help you find that Bel Air home you’ve been dreaming of.
Will rates come down?
At the most recent Federal Reserve meeting
, Chairman Powell indicated that the Fed’s plan to cool inflation is working and interest rate hikes will cease eventually. The question is when and whether they will then be lowered.
First, it’s important to remember that while rates did rise precipitously this year, they are low historically. We’ve all heard of or experienced rates reaching nearly 20% in the early 1980s. Even during the early 2000s, rates reached 8.52%. This is a far cry from today’s average rate for a 30-year fixed mortgage, which is hovering around 6.5%
There are many indications
that the Fed will slow their interest rate increases and maybe even halt them in 2023. While mortgage rates are not directly linked to the Fed Rate, mortgage rates do often move similarly. Banks often look to the same or similar economic indicators as the Fed. When the economy is healthy, you will see lower rates for both mortgages and the Fed. While there have been signs of economic improvement throughout the beginning of 2023, fears of a recession still linger.
If there is one thing we’ve learned over the past two years, unpredictable global events can change the U.S. economy in a hurry. There’s no telling what the rest of the year might hold, but with today’s outlook, 2023 looks to be less dramatic
Will the market pick up where it left off?
When rates do decline again, will the market pick up where it left off? As we discussed earlier, there continues to be an undersupply of homes in Southern California. Following the laws of supply and demand, it stands to reason that as soon as buyers feel comfortable with the current mortgage rates and their monthly payments, sales will pick up again.
However, it is unlikely that interest rates will reach the historic lows of 2020-21, so demand may not reach the same astronomic levels as we saw during that time. However, Bel Air real estate is still among the most sought-after zip codes in the country, and buying homes in Bel Air will continue to be a great investment.
Sellers should put their best foot forward
While it is unclear whether interest rates will moderate or even decline a little, one thing is certain. The bidding wars and buyer frenzies of recent years are likely a thing of the past. As we’ve discussed, there’s currently a more limited pool of buyers active in the market, and while this may increase slightly in 2023, we are not likely to see the mad rush of recent times.
This means that sellers will need to put their best foot forward. When the market was in a buying frenzy, sellers didn’t have to try very hard to attract offers above the asking price. However, as sales have slowed, sellers should make sure their properties are in top shape and they are deploying aggressive marketing plans.
A qualified realtor is more important than ever. The right realtor can advise and assist sellers with techniques to catch the eyes of buyers, such as repairs and renovations that will get them the best return on investment, beautiful staging, professional and eye-catching photography, and events that will pull in the right buyer.
In conclusion, exhale in 2023
While we don’t have a crystal ball and can’t say exactly what will happen throughout the rest of the year in the Bel Air real estate market, there is an overall sense of calm. The market seems to be coming more into balance. Buyers can take solace in knowing that prices are no longer through the roof and interest rates appear to be settling as well. Sellers may have to work harder but should feel confident with the number of sales and demand still in the market. Overall, it appears that everyone can exhale in 2023.
If you have additional questions on the current market or if this forecast has given you the confidence you need to enter the Bel Air real estate market, contact Desiree Lapin
today,*Header photo courtesy of Desiree Lapin