How any economic sector will evolves difficult to predict, and the same is so for real estate. However, seasoned market commentators think the sector will remain relatively robust in the U.S.
Louise Phillips Forbes is a producing agent at Brown Harris Stevens and a 33-year real estate leader pushing sales totals close $5.5 billion. Forbes has knowledge about the way the real estate market is changing and she has broken down local and national real estate trends, specifically highlighting the following market-defining predictions, for Digital Journal.
Interest rate hikes will not have the intended impact in highly populated markets
According to Forbes, while consumers have been hit hard by interest rate rises real estate is an area that has remained unscathed: “Without minimizing the hit to homeowners’ monthly budgets, due to a marked lack of inventory across much of the country, the Fed’s self-induced recession through increased interest rates will not lead to sweeping price decreases. First time buyers will sadly continue to feel the brunt and remain priced out of the market. Without inventory, 2023 transactional volume will take a hit.”
People will only put their lives on hold for so long
Another thing with the current economic predicament is consumers reluctance about spending. However, there will come a time when people will find ways to pursue their ambiens, observes Forbes. She notes: “Where there is inventory, there will be deals. As the initial shock wears off, buyers will again feel a sense of urgency and look to stay ahead of subsequent rate increases. They will lean into their banking relationships and get creative with financing. And sellers, who have held firm on their prices, will start to demonstrate a willingness to negotiate. Due to natural absorption in dense markets with inventory, the first two quarters of 2023 will be stronger than the second half of the year.”
There will be movement of foreign money if it is already in the U.S.
There are particular trends with those who are non-U.S. nationals. Forbes considers these: “International sellers can afford to take less for their investment properties because of an arbitrage in their national currency of origin and the dollar. Simultaneously, international buyers who already have properties and financial assets in the U.S., are taking advantage of the weaker market and expanding their portfolios.”
There will be highlights
Despite the economic gloom, Forbes is optimistic for the overall performance of the real estate sector: “Concentrated markets with inventory will see traction in the first half of the year. While we might see ups and downs, New York City is never boom and crash. Some things must change in the city to keep a strong market: policies need to be beneficial instead of strictly political – rezoning, tax breaks that foster jobs, and tax incentives for the development of affordable housing are a necessary first step to re-shift and continue our recovery.”
