How’d Real Estate Do in 2023?
Back in January 2023, we predicted another roller coaster year of real estate here, and the year
delivered. Interest rates shifted regularly, some houses sat on the market while others flew off,
and a lot of people paused their home goals for a minute. Whew!
First, you can refresh your memory of how the numbers went here: 2021 Update, 2022 Update.
Now, let’s dig into what happened in 2023.
Home Sales
In 2023, the number of home sales slowed significantly. In fact, at just over 13,000 homes, we sold
less than we did back in the olden days of 2019.
There are a few reasons for this slowdown:
– Interest rates jumped briefly to about 8% (though right now, we’re looking in the low 6%
range).
– Student loan payments were started up again for many in October.
– With the end of the pandemic, many people settled back into going back to the office,
which changed how flexible they could be with where they live.
– Fears of a recession had many in the “wait and see” camp.
All of this is OK. Frankly, last year was the breathing space many needed.
And now, for the actual numbers. As you can see below, we sold significantly less homes in 2023
than in the past two years, across every price point.
Home Prices
One of the biggest trends in real estate we’ve been tracking is the average price for a home. With
the number of homes sold decreasing, you might think the prices also came down.
And you’d be incorrect.
Since 2019, we’ve seen a steady increase in average price annually.
Why?
– It’s gotten more expensive to build homes. Every construction cost has gone up, and most
have not come back down to pre-pandemic levels.
– With new construction being more expensive, there is still a lack of inventory in the lower
price points (more on that below). A lack of supply and an increase in demand drives up
prices.
Available Inventory
Now let’s look at market conditions right now. Do we finally have inventory? The short answer is
that it’s still generally a seller’s market or balanced market. As always, whether we have a seller’s
market (less than three months of inventory available), a balanced market (three to six months of
inventory available), or a buyer’s market (more than six months of inventory available) varies
widely based on the price point. You can see the seller’s market, balanced market, and buyer’s
market price points below.
What’s Next?
This spring, we’re going to start off with a bit of a bang. Buyers are out right now looking at homes.
We have a lot of pent-up demand, and interest rates are expected to stabilize and come down in
2024.
If you’re looking to buy homes that are priced right below $350,000, you may see some buyer
competition, especially early in the spring before more listings start to hit the market.
For those looking to sell, don’t be fooled by the lack of inventory. We’re still seeing buyers be very
picky when homes are overpriced. And, be prepared for buyers to ask for higher seller credits and
concessions.
And finally…
How to handle the ups and downs? Contact us! We’re always happy to chat about housing, life, the
universe, and everything!
– Nora Crosthwaite, [email protected], 515-783-9815
– Jessica Shanley, [email protected], 515-707-5750
– Narda Strom, [email protected], 515-416-3400
Happy New Year!
Licensed in the state of Iowa
Home Sweet Des Moines, brokered by Realty ONE Group Impact
