Market Update: Spring 2023


At our recent company meeting, CEO Kevin Woeste, PS, PLS, LS, provided the team with an economic outlook for McSteen, including a look at the current state of the real estate market, where it has come from, and where he sees it going. 

The impact of interest rates on the real estate market

The story of 2022 can really be summed up in a single word – inflation. Personally, we all felt it in our day-to-day lives and likely still are. From a market standpoint, inflation’s biggest impact was the interest rate increases instituted to try to cool it. But, really, the story is not just that the government raised interest rates, it is that it was the largest increase over the shortest time we have ever seen. Not surprisingly, then, we also saw the housing market take a pause. 

We have recently we have seen those rates flatten and normalize and while we may see some increase in the future it will be at a much smaller and slower pace making people feel more comfortable purchasing a home. And be assured that there are a lot of people who need to buy a home over the next 10 to 30 years. In fact, there is really an entire generation who currently is renting or living with family that is looking to buy a home. 

Construction and commercial projects remain strong 

As for construction, it remains strong and we are confident that it will remain so over the next few years. Consider that the United States needs about 2 million homes and we are on track to build between 1.2 million and 1.5 million. There is a large gap, due primarily to the fact that there are not enough builders, tradespeople, and supplies. 

We saw the same strength in the commercial real estate market in 2022. It was extremely strong last year and we expect that to continue, as people are continuing to do business and develop commercial properties and projects. 

What to expect from the real estate market in 2023 and beyond

So where does this leave us looking forward through 2023 and beyond? We expect to see a relatively stable market; not necessarily crazy like 2021, but stable with an upward trend year over year. Although we are technically in a recession, we think that the slowest period is behind us and that overall the consumer is in a good place moving forward. 

In the news

In addition to our own market outlook, we reviewed what others are saying about the real estate market, and here’s what we found.

Expect The Spring Housing Market To Be Calm, But Competitive – The market cooled dramatically in the second half of 2022, amid rising mortgage rates and two straight years of red-hot competition. But as mortgage costs bumped down from their peak in the fall, sales returned. Though sales still remain below where they were a year ago, they’ve rebounded significantly over the past few months.

7 economists and real estate pros on what to expect in the housing market this spring – For her part, Nadia Evangelou, NAR senior economist and director of real estate research, says: “With mortgage rates projected to stabilize below 6% in the second half of the year, more Americans will likely become homeowners, boosting the homeownership rate.”

Here’s what’s happening with home prices as mortgage rates fall – More inventory on the market would help bring more buyers back into the market. Anecdotally, real estate agents are reporting an earlier-than-usual surge in the spring market, with open houses seeing more foot traffic in the last few weeks. Some also reported the return of bidding wars.


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