HOUSING MARKET FORECAST: PREDICTION FOR 2023 | Luxury Realtor Cristal Clarke

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Each year, experts make their housing market forecast, and for 2023, many housing insiders are keeping a watchful eye on the economy. After a couple of red-hot years in the industry, indicators show a correction is underway, driven by high inflation, steep interest rates, and ongoing geopolitical uncertainties. Although mortgage rates are more than double the amount they were at the beginning of 2022, low housing inventory continues to be a challenge as the demand of would-be buyers continues to outpace supply.

the number 2023 in lights on a black canvas — Photo by Moritz Knöringer on Unsplash

Inflation, steep interest rates, ongoing geopolitical uncertainties

The National Association of Realtors® (NAR) unveiled its report on the year ahead at a virtual summit. America's largest trade association predicts prices will remain stable and calculates US GDP will grow by 1.3%. That's about half of the typical historical pace of 2.5%. After eclipsing 7% in late 2022, the 30-year fixed mortgage rate is expected to be 5.7% as the Fed slows the recent rate hikes to control inflation.

"Half of the country may experience small price gains, while the other half may see slight price declines," Lawrence Yun, NAR chief economist and senior vice president of research, said. "However, markets in California may be the exception, with San Francisco, for example, likely to register price drops of 10–15%."

Since the 2008 housing crash, low housing inventory has been a challenge causing new home construction to plummet. And as of the beginning of 2023, that new construction has still not fully recovered. But that’s good news for sellers because when the housing supply hits near historic lows as it has, higher home prices are sustained.

"The demand for housing continues to outpace supply," Yun said. "The economic conditions in place in the top 10 US markets, all of which are located in the South, provide the support for home prices to climb by at least 5% in 2023."

The California Association of Realtors® (CAR) released its 2023 California Housing Market Forecast too, which predicts the current market shift will continue as recession and higher interest rates affect housing demand.

Santa Barbara home on a hill, with 4 tall palm trees in the foreground, overlooking the town and ocean beyond

My Predictions

With the market shifting, I predict Santa Barbara area home sales and prices will temper next year as buyers and sellers adapt to the new realities of the market. And while sellers must adjust their expectations, well-priced homes are still selling quickly. The right agent will price your home correctly from the start and market your property to the right buyers. That’s why the sellers of the Stunning Ocean View Santa Barbara Rivera Contemporary pictured above turned to me for my expertise. Working with the right real estate agent is key.

A more favorable market environment means buyers have more homes to choose from here in Santa Barbara, with fewer selling above the asking price. Those who were outbid or sat out during the past two years when the market was fiercely competitive are now ready to make a move.

Perhaps this information on the housing market forecast for 2023 has inspired you to list your property now in Montecito, Hope Ranch, or any of Santa Barbara's upscale communities or move in the area. I don't blame you. While this may be a more challenging time to sell or buy, working with the right realtor is of utmost importance. Contact me at (805) 886-9378 or email me at Cristal@montecito-estate.com for a complimentary consultation.

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Client Reviews

“Cristal Clarke has conducted numerous real estate transactions for me beginning 13 years ago with the purchase of a Lemon Ranch. She has handled both large and small purchases and sales with equal dedication. As a negotiator, you can’t find anyone better. Her transactions are always conducted in the most appropriate and professional manner. Cristal has considerable knowledge of the Santa Barbara market.”

- S.N. Decker Ph.D.

“Living in Europe, we were to say the least, unaccustomed to the nuances of Real Estate acquisition in California and Cristal steered us through the process with absolute professionalism and personal attention to detail at every turn. Her in-depth knowledge of the market place combined with enthusiasm and drive was the only reason we secured the property of our dreams and will be forever grateful. If you are looking for personal discrete and private representation of the highest quality we suggest you look no further than Cristal Clarke.”

- Johan and Paula van den Berg

“Cristal is very straightforward, cheerful, helpful, professional and trustworthy….we felt very lucky to work with her.”

- John and Lacey Williams

“After considering our many choices, we are grateful it was Cristal Clarke of Sotheby’s International who represented the sale of our Montecito cottage. We are familiar with Cristal’s reputation of hard work and dedication to clients, but it was her attention to detail that made our experience so positive. She offered suggestions for staging the property, worked in harmony with potential buyers and was even able to secure back up offers. The sale of our cottage was completed much sooner than we expected, due in great part to Cristal’s professional skills and support. We highly recommend Cristal as a first choice for anyone needing representation with real estate.”

- Michael & Nancy Lee

“Our experience in working with Cristal Clarke resulted in the successful and discrete acquisition of a property which was not yet on the open market. Her knowledge of the Montecito/Santa Barbara area and vast expertise blended with her passion for real estate and architecture, provided us with the very highest level of professionalism and personalized services. Cristal exhibited a rare combination of excellent communications, attention to detail, creativity and patience.”

- Richard and Catherine Frinier

“Cristal really breaks the mold. She knows every nook and cranny of this real estate market, understands value, and follows up on everything, all the time. She was incredibly patient with our two year quest to find the perfect house. Every house hunting trip from across the country was well planned, and our time was never wasted. On top of her professionalism and expertise, she is delightful to spend time with. We are thrilled with the home we purchased, and grateful to Cristal for so wisely advising us through this process, right through to the close and beyond.”

- Laurie Siegel

“We met Cristal first in the course of renting a winter home (for three years), then buying a house using her as our agent. She was amazingly good at listening to our wants and showing us homes that fit our needs. Her mastery of the paperwork was perfect. Most importantly, there was never a situation where we doubted her straightforwardness or integrity. If we do another real estate transaction in Montecito (which I doubt, we’re happy with what we purchased), without question we’d use Cristal again.”

- Ken Saffir

“Susan and I just want to thank you for your efforts in the sale of our home. You are really quite amazing. Your competence, persistence, optimism and humor made the entire process effortless. Every problem that arose, you somehow fixed; any obstacle, you overcame. We have bought and sold many homes. It has never been such a painless and enjoyable process!”

- Michael & Susan Marquart

“A little something about “our” realtor, Cristal Clarke. My wife and I came to Santa Barbara about fifteen years ago looking for a seasonal home from which to enjoy the weather and amenities of the central coast. Being in the real estate business myself I was familiar with agents and brokers so entered the market with open eyes. We “flipped” a few houses in the early years, dealing with various agents and finally ended up in Montecito. That’s when good fortune put us together with Cristal. To say we were impressed is to put it mildly. Cristal really knows the market. She is familiar with the area, its history and trends. When we have questions about a particular property she either has the answers immediately or gets back to us by phone or email. There is no waiting or wondering with Cristal. She is an agent who is “on top of it.” Her recommendations as to price points, contractors, inspectors and title agents have proven to be exceptional, showing great insight and the highest professional standards. We consider ourselves exceedingly fortunate to say that Cristal Clarke is our realtor and would recommend her services to any serious buyer or seller.”

- Rob & Judi Kelch