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What To Expect From the Portland Housing Market in 2023

2023 Housing Market

The 2022 housing market was defined by two key things: inflation and rapidly rising mortgage rates. This in turn began the market reset.

To combat inflation the Federal Reserve (the Fed) took drastic action in the later part of 2022 to lower inflation. The rapid rise in interest rates caused mortgage rates to more than double – something that’s never happened before in a calendar year. This rapid rate of increase had an immediate chilling effect on home buyers. Some buyers were priced out of the market while others decided to wait until till things leveled out. The subsequent decrease in buyer demand slowed the market and inventory levels have gradually started to increase from historic lows to about 50% of normal here in Portland Metro.

Balance between supply and demand

Ultimately the balance between supply and demand determines home prices. What’s different today is that while home prices have declined somewhat … they haven’t fallen dramatically because inventory levels are still well below normal.

But what does that mean for next year? What everyone really wants is more stability in the market in 2023. For that to happen we’ll need to see the Fed bring inflation down even more and keep it there. Here’s what housing market experts say we can expect next year.

What’s Ahead for Mortgage Rates in 2023?

Moving forward, experts agree it’s still going to be all about inflation. If inflation is high, mortgage rates will be as well. But if inflation falls, mortgage rates will likely respond. While there may be early signs inflation is easing as we round out this year, we’re not out of the woods just yet. Inflation is still something to watch in 2023.

Right now, experts are factoring this into their mortgage rate forecasts for next year. When we average those forecasts together, experts say we can expect rates to stabilize a bit more in 2023. Whether that’s between 5.5% and 6.5%, it’s hard for experts to say exactly where they’ll land. But based on the average of their projections, a more predictable rate is likely ahead (see chart below):

What To Expect from the Housing Market in 2023 | MyKCM

That means, we’ll start the year out about where we are right now. But we could see rates tick down if inflation continues to drop. As Greg McBride, Chief Financial Analyst at Bankrateexplains:

“. . . mortgage rates could pull back meaningfully next year if inflation pressures ease.

In the meantime, expect some volatility as rates will likely fluctuate in the weeks ahead. If we see inflation come back under control, that would be good news for the housing market.

What Will Happen to Home Prices Next Year?

Homes prices are always be defined by supply and demand. When there are more buyers than homes for sale on the market, home prices rise. And that’s exactly what we saw during the pandemic.

But things have changed. During the later half of 2022 we saw home prices moderate and housing supply grow as buyer demand pulled back due to higher mortgage rates. The level of moderation has varied by neighborhood – with the biggest changes happening in overheated markets. But do experts think that will continue?

The graph below shows the latest home price forecasts for 2023 on the national level. As the different colored bars indicate, some experts are saying home prices will appreciate next year, and others are saying home prices will come down. If we take the average of all the forecasts (shown in green), we can get a feel for what 2023 may hold.

What To Expect from the Housing Market in 2023 | MyKCM

The truth is probably somewhere in the middle. That means nationally, we’ll likely see relatively flat or neutral appreciation in 2023. As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says:

After a big boom over the past two years, there will essentially be no change nationally . . . Half of the country may experience small price gains, while the other half may see slight price declines.”

Bottom Line

The 2023 housing market is going to be defined by mortgage rates, and rates will be determined by what happens with inflation. If you’re considering buying or selling a home in 2023, the best way to keep a pulse on the market is to connect with us on the SkyBlue Portland Team. Let’s talk.

 

To learn more online see our Buyers Guide or Sellers Guide for in-depth information.

Meet the SkyBlue Team

James Bradley - Principal Broker   
Licensed in OR and WA
James Bradley - Principal Broker
Licensed in OR and WA
Rachel Bradley - Principal Broker - Licensed in OR
Rachel Bradley - Principal Broker
Licensed in OR
Susan Bradley - Marketing Director - Licensed in OR
Susan Bradley
Marketing Director

How's the Market?

After two years of double-digit appreciation the Portland real estate market has shifted. The dramatic increase in interest rates has slowed sales. The chart below provides a snapshot of the Portland market as of this week.

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Free Seller Guide

It’s difficult to know when is the best time to sell, or how to get the most money for your house, but you don’t need to go through the process alone.

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You may be wondering if prices are projected to rise or fall…or how much competition you may be facing in your market. The free eGuide above will answer many of your questions and likely bring up a few things you haven’t even thought about yet.

Sell-Buy Program

Uncertain about selling? Many people are hesitant to sell because they are concerned about the selling and buying timeline. They want to be sure their home sells in time to cover expenses for the new home they want to buy and at the same time they want to be sure they don’t sell before they have found their next home. This is a valid concern.

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The good news is, it is possible to sell your current home and buy your next home, even in this competitive market. Click the image above to learn more about the SkyBlue Sell-Buy Program.

Find Your New Home

If you're thinking of making a move or are just curious, click the image below to find all the homes for sale currently on the market.

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Rachel Bradley - Principal Broker - Licensed in OR

Rachel Bradley

Principal Broker

Licensed in OR

503-936-3373

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