The real estate industry is in for a wild ride over the next year, according to the Realtor.com's 2023 Housing Market Predications Report. This forecast predicts an overall positive outlook with ongoing growth, but it also acknowledges that several regional markets are more volatile than others and may not experience consistent gains. This report shows Knoxville shows a 7% price increase from year over year - but 1% decrease in sales from last year... which leads us to believe that demand is high and supply is still low.
The report notes that there are some headwinds to sustained growth, particularly in regions affected by the pandemic and its economic fallout. Tightening credit conditions, an already low inventory of homes for sale, and historically high lumber costs may all put pressure on affordability and slow the housing market's progress.
The good news is that many markets have been resilient and there are signs of optimism as the economy recovers. Knoxville is one of those markets. Realtor.com expects that home prices and sales activity will continue to rise in most markets, albeit at a slower pace. Affordability is projected to remain a challenge for some buyers, however, as potential buyers may have difficulty securing financing.
The report also predicts an increase in rental activity over the next year as renters take advantage of more affordable housing options and the flexibility that comes with not having to commit to a longer-term mortgage agreement. This could spell good news for investors looking to capitalize on these shifting trends.
If historical patterns hold true in 2023, inventory is likely to remain suppressed until mid-March when the spring home-buying season kicks off in earnest. However, around 85% of mortgage holders are locked in with rates below 6% – meaning additional inventory will be hard to come by even as more buyers come off the sidelines as the summer months approach.
Overall, the 2023 National Housing Forecast predicts a continued rise in housing prices, though certain regional markets may be more volatile than others. It also forecasts an increase in rental activity as renters take advantage of the flexibility that comes with renting. All of this suggests a vibrant and dynamic real estate market going into 2023, so it’s important to stay informed and up-to-date with the latest trends.
As for what's happening locally here in Knoxville, this is what Hancen Sale shared in his February Market Pulse Update for the Knoxville Area Association of Realtors...
- Knoxville experienced the fastest rent growth of any U.S. metro area in 2022, according to a report from the National Association of Realtors®.
- Home prices in the Knoxville area increased 8.3% for single-family homes and 20.4% for condos from the previous year in Q4 2022.
- According to Redfin analysis, the total value of Knoxville's housing market rose 17.7% year-over-year in 2022 – the third largest increase in the country.
- Knoxville ranked No. 11 among U.S. metros with the highest share of inbound migration according to Rent.com's latest migration report.
- KAAR released its 2023 Forecast Report in December, predicting home sales to decline 10-12% and home prices to increase 3-5% in 2023.
No matter where you are in your real estate journey, it’s important to stay abreast of the fluctuating market conditions. By doing so, you can ensure that you’re making informed decisions and leveraging the best opportunities available to you. With a comprehensive understanding of the current market conditions and the changing trends, you can make sure that you’re making the most of your investments and positioning yourself for success.
