Realtors predict California home prices will drop 8.8% in 2023

Real Estate San Diego
A For Sale sign on a Mission Hills home. File photo

Expect a weaker California housing market in 2023 as an ongoing battle with inflation creates a minor recession – keeping interest rates high and suppressing buyer demand, according to a forecast released Wednesday by the California Association of Realtors.

The CAR’s “2023 California Housing Market Forecast” base-case scenario calls for existing single-family home sales to decline 7.2% next year to 333,450 units, down from the forecast sales figure for 2022. of 359,220.

The 2022 figure is 19.2% lower than the pace of 444,520 homes sold in 2021, according to the real estate trade association.

The median home price in California is expected to fall 8.8% to $758,600 in 2023, after a forecast increase of 5.7% to $831,460 in 2022 from $786,700 last year.

A less competitive housing market for homebuyers and a normalization in the mix of home sales will dampen median price growth next year, CAR said.

The forecast did not break down its projections by region.

“As the market evolves as home sales and prices are expected to moderate next year, buyers and sellers are adjusting to new market realities,” said CAR Chairman Otto Catrina. Bay Area realtor and real estate agent.

“As sellers adjust their expectations, well-priced homes still sell quickly,” he said. “And for buyers: more homes for sale, less competition, and fewer homes selling above asking price all point to a more favorable market environment for those who have outbid or held back in the past two years when the market was fiercely competitive.

CAR’s forecast for 2023 also calls for a decline in US gross domestic product of 0.5% next year, following a forecast rise of 0.9% in 2022.

With a non-farm employment growth rate of 1.0% in California in 2023, compared to an expected increase of 4.9% in 2022, the state’s unemployment rate will increase to 4.7% in 2023 per compared to the expected rate of 4.4% in 2022, the association said.

Stubbornly high inflation and growing economic concerns will keep the average 30-year fixed mortgage interest rate at 6.6% in 2023, from 5.2% in 2022 and 3.0% in 2021, but will remain relatively low compared to historical norms, according to forecasts.

City News Service contributed to this article.

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