A Look Back at the 2022 Real Estate Market & What to Expect in 2023

2022 was a complete roller coaster for the real estate market, especially in Jacksonville. As the new year begins, we can only hope it’s nothing like the last. 2022 started out in a burning hot sellers market, and it was due to many factors.

*In a nutshell, in 2019/2020, mortgage rates were low and rents were high; everyone wanted to buy a house; there weren’t enough houses for them to buy; this created high competition; which drove prices up...Supply and Demand :)

In 2022, home prices in Jacksonville appreciated by 24.89%, making it in the top 3.5% in the country in terms of appreciation. To put that into perspective, the average annual appreciation for the nation is 3-4%.

Along with a rise in home prices, came a rise in inflation, which led to a rise in mortgage rates. Inflation reached a 40 year high, and in efforts to curb inflation, the fed raised the benchmark interest rates 7 different times in 2022. To put that into perspective, the interest rates for a 30 year mortgage in January of 2022 was around 3.22%. By October, it had reached just above 7%.

This is by far the highest that interest rates have been in our time. If you were alive, and old enough to know what a mortgage rate was in the 1980s, then you are aware that the rates back then were as high as 16.6%. So yes, in the grand scheme of things, interest rates are still “historically low”. But here’s to hoping that 7% was “historically high!” for this century!

Towards the second half of the year, and as rates increased, the market began to shift away from a seller’s market and into a buyers market. While some argue we are still in a sellers market, there was undoubtedly a shift. High interest rates made it impossible for most people to buy a home. Simultaneously, many people jumped on the bandwagon of trying to sell their home for a high price tag! With less buyers looking to buy, they kind of missed their chance. Houses were/are sitting on the market for much longer, and sellers have been forced to lower their prices, thus driving prices down (supply and demand at it again).

So, what can we expect in 2023?

While no one can predict the future, one thing is for sure: the fed will raise interest rates again. Experts predict interest rates will rise by another ¾ of a percentage in 2023 before going back down again.

Home price predictions are all over the place, so there is really no telling. Some experts predict a decline of 22% in home prices, while some predict an increase of 5%. It will mainly boil down to interest rates and inventory, and it will definitely depend on location. Jacksonville, and other “hot spot” markets, always seem to be the exception for national trends. Lawrence Yun, chief economist of NAR, says “half of the country may experience small price gains, while the other half may see slight price declines”.

All in all, the best strategy to buy or sell a home in 2023 is to have a trusted realtor on your side who knows the market well, and knows how to negotiate to get you the house you want.

If you are interested in buying or selling a home in 2023, contact me at 904-874-0009!

Cover photo is from DeZeen.com and designed by In Situ Studio in Raleigh NC.