2023 provided an exciting mix of good news, ugly news, just plain wrong news, and some so-so news. We started the year in correction mode, with housing prices stabilizing or decreasing in some markets, falling demand, and persistent inflation. Then, a flurry of federal interest rate hikes came, and the market reached a slow crawl by Q4. Now that inventory has fallen off a cliff, the labor market has slowed, and inflation is treading below 3%, we will surely be in store for another exciting year of data and stories to share. Look for our 2024 Real Estate Market Outlook next week.
But for now, here’s a recap of our top 7 stories from 2023 and what shaped this year’s narrative.
Boston is the Third Most Expensive City for Renters
The biggest story we published in Real News for Homebuyers this year was Boston is the Third Most Expensive City for Renters, which came out in March. Boston slipped by San Francisco to move into the dubious third-highest rental market in the U.S. With inflation at its highest level since the early 1980s, Zumper’s National Rent Report found that rent is a leading indicator of rising inflation rates, as the three markets with the highest inflation numbers also have the most dramatic growth in rental prices.
Actual Outcome: In Zumper’s National Rent Report in November 2023, Boston maintained the third most expensive rental market below New York City and Jersey City.
2023 Real Estate Market Outlook (And What It Means for You)
While not the flashiest of headlines, the 2023 Real Estate Market Outlook (And What it Means for You) came out in early January as a special report, it outlined what we thought the 2023 market would be like. In an interview with Bankrate, Nadia Evangelou, senior economist for the National Association of Realtors, shares her vision of three possible mortgage rate scenarios:
- Inflation continues to surge, forcing the Fed to raise interest rates repeatedly. In that scenario, she predicts that rates could reach 8.5%.
- Inflation decelerates, and mortgage rates follow suit, averaging 7 to 7.5% for the year.
- Rising interest rates trigger a recession, which could ultimately lead mortgage rates to drop closer to 5% by the end of the year.
Actual Outcome: Thankfully, her number 2 scenario played out to perfection; inflation decelerated, and the average mortgage rate for 2023 was 7%.
7 Tips to Maximize Your Home’s Sale Price
On January 1, 2023, Real News You Can Use the 7 Tips to Maximize Your Home’s Sale Price article garnered significant clicks. Over the past few years, a real estate buying frenzy bid up home prices to eye-popping amounts. However, as mortgage rates have risen, buyer demand has cooled. Consequently, home sellers who enter the market today may need to reset their expectations.
Actual Outcome: Fortunately, the steps you can take to set yourself up for success as a home seller in this market are as valid today as they were then. You will always play an essential role in the selling process of your home.
Mortgage Buydowns are the Hot New Thing Helping the Housing Market.
The January 1, 2023 issue of Real News for Homebuyers included an Axios article highlighting a new trend in the housing market called a mortgage buydown — a concession home sellers are increasingly offering buyers to seal a deal.
Why it matters: Though they’ve been around a while, buydowns seem a tailor-made solution for the current real estate market’s biggest problem: High mortgage rates hovering around 6% have turned off buyers.
How it works: Sellers, homebuilders, or even lenders pay cash to lower the buyer’s mortgage rate by typically one to three points.
Actual Outcome: None of the 25 transactions that the Hickman-Coen Home Team was involved with in 2023 contained a mortgage buydown. According to Freddie Mac data on purchase, 30-year fixed-rate, conforming, and owner-occupied mortgages, temporary buydown mortgages comprised 2.8% of Freddie Mac funded loans in June 2023, up from near zero a year ago but down from a peak of 7.6% in December 2022.
Will there be a Tsunami of Foreclosures in 2023?
In the February 1, issue of RealNews You Can Use, we published a Bernice Ross of Inman interview with Rick Sharga, the executive vice president for market intelligence for Attom Data, about his predictions about general trends and foreclosures.
According to Sharga, There’s virtually no chance we will see that foreclosure activity again. Before the pandemic, foreclosure activity was low compared to historical numbers. That was primarily because of changes in lending practices that were put in place back in 2010 as part of the Dodd-Frank Act, including the Qualified Mortgage Rules and the Ability to Repay Rule.
Sharga said these changes have resulted in more qualified borrowers than in the past. Loan performance has also been solid, causing foreclosure activity to drop from the typical 1 percent level of about 550,000 loans (based upon 55 million U.S. mortgages) to about 250,000.
Actual Outcome: There was a slight uptick in foreclosures in 2023, Quarter 3, “Foreclosures are on the rise again this quarter, as indicated by our latest foreclosure numbers,” said Rob Barber, CEO at ATTOM.” The number of new cases filed by lenders in the third quarter did rise just a tiny amount from the same period last year and dipped a bit quarterly—signs that the upward pattern may be easing. But foreclosure starts are nearly back to where they were two years ago when the federal government lifted a pandemic-related moratorium on most foreclosure filings. This rise in foreclosures might also be attributed to pending filings finally being processed. Even with the national economic upturn and job stability, it’s evident that some homeowners are still grappling with the pandemic’s financial aftermath or encountering new challenges.
Three West Roxbury houses become the first internationally certified Passive Homes in Boston.
In September issue of Real News You Can Use, we shared the Boston.com story of three newly constructed homes in West Roxbury, the first in Boston to achieve international Passive House certification.
To become internationally certified, Passive Houses must fit a particular set of criteria that work to produce a high-efficiency building that has a low impact on the environment, according to Mike DelleFave from RODE Architects, the Boston-based collaborative design and architectural firm behind the Brucewood Homes project.
William Raveis Wins Inman Innovators Top Brokerage 2023
Since 1998 Inman, the voice of REALTORS® and national real estate news,has honored companies, individuals and new technology that increases productivity, efficiency and transparency for consumers and real estate professionals alike. Out of more than 150,000 real estate firms in the country, only a handful of finalists will meet the criteria to qualify and win. This year’s slate of winners was announced live at Inman Connect Las Vegas on August 10, 2023. The high honor of “Top Brokerage” was bestowed upon William Raveis, a title that is well deserved after 50 years in the real estate industry.
Closing the Year
2023 was a challenging market. We’re about to be four years removed from the pandemic’s beginning and have gone through a modest housing correction nationally, and locally, housing is still very much in demand.
2024 will return somewhat to normalcy, with seasonal patterns and average growth prevailing.
Look for our upcoming special report, “2024 Real Estate Market Outlook (And What It Means for You),” due out January 7, 2024
We’ll continue to provide the news, data, and stories you need to be a better-informed real estate investor, homebuyer, and homeowner to help you make the right real estate decisions.