Market predictions for 2023: what you should know before the year begins

 

The real estate market jumped in value during 2022, with prices for homes rising in many states. However, a different picture is on the horizon for the following year.

What will happen after the holidays, and could we see other changes?

According to the Federal Housing Finance Agency's Home Price Index (FHFA HPI), U.S. residential property values increased by 17% from the second quarter of 2021 to the same period this year.

In addition, compared to the first quarter of 2022, a 4% increase in home prices has been reported. However, starting in June, experts noticed that the monthly data trends began to slow down.

William Doerner, supervisory economist in FHFA's Research and Statistics Division, said that after prices rose rapidly through most of the second quarter, the pace of growth began to slow in consistency with other recent related data.

Although the data pointed to the highest extreme since last year, experts predict a turnaround in home prices looming in 2023.

Economic research firm Capital Economics stated that the significant increase in mortgage rates in the U.S. will have an impact on the average expense a buyer must cover when purchasing a property.

Mortgage rates soared after the Federal Reserve (Fed) announced an increase in the benchmark interest rate. As a result, now, those planning to invest in residential property must spend more than a quarter of their annual income on mortgage payments alone, Capital Economics showed.

Other factors that may play a role include higher interest rates and high construction costs that exclude many prospective buyers.

As a result, both the construction industry and the real estate industry will see a sharp downturn next year.

In addition, according to the National Association of Home Builders (NAHB), the supply of single-family properties will decrease in 2023 to cope with upward price pressure, as construction was also predicted to experience a decline next year.

Many buyers have backed out and have not invested as they had hoped due to high prices.

While the market appears to be more balanced, analysts believe that the rate of home purchases will fall due to rising interest rates and steadily increasing construction costs, as both factors continue to drive away a substantial portion of property buyers.

NAHB Chief Economist Robert Dietz said this would be the first year since 2011 to see a drop in statistics related to single-family homes.

What happened to the fixed mortgage interest rate?

According to mortgage market analysis and outlook website Mortgage News Daily, the interest rate on a 30-year fixed mortgage was estimated at 7.29%, making it the highest 30-year rate in the past two decades.

Experts said no one had anticipated a turn of events of that magnitude, as an interest rate of no more than 5% had been predicted.

Zillow, the real estate market firm, maintained the same forecast on home values in October. However, according to its monthly forecast, the national index of the cost per residential property will increase by only 1.3% in the next year, despite having risen by 12.9% from September 2021 to the same period in 2022.

Analysts anticipate that national home prices will drop by 1.4%, but there will be variations in each regional market.

They also believe home values will fall in 271 of the 896 U.S. regional real estate markets between September of this year and the same month in 2023.

 

The company's latest forecasts showed that home prices are expected to fall to the lowest in the following areas:

The Villages, Florida (6.9%)

Punta Gorda, Florida (6%)

Reno, Nevada (5.57%)

Honolulu, Hawaii (5.56%)

Spokane, Washington (5.52%)

According to the latest projections from real estate analysts, a 5% drop is expected by mid-2023 despite earlier predictions suggesting that property values would remain flat during that period. But prices are not the only thing that could decline, with the 30-year mortgage rate doubling since January, the volume of mortgage applications has also hit a more than two-decade low.

Differences between investing in real estate and buying real estate in Miami

 

Have you ever wondered what the difference is between investing in real estate and buying a property in Miami? Here’s some information for you to take into consideration:

If you would like to invest in real estate, it is important to know how to do it. One of the main differences between investing in real estate and buying real estate is that when you invest, you put market needs before personal interests or tastes.

If you are going to invest in real estate in Miami, make sure to check:

-       The location of the property

-       Nearby services and amenities

-       That the property is in good condition

-       That the property is located in an area with high added value

When you buy a property, your emotions and tastes are involved, whereas when you invest, you take other factors into consideration, like, for example, the square meter price of a property.

Remember that if you are interested in investing in Miami, you should consult a Real Estate Market Report, to know the capital gain, the time on the market, the gross rental profitability, the price-to-income ratio and the price-to-rent ratio.

Top 5 Tips to Carry Out a Safe Investment in Miami

The city of Miami has changed immensely in the past twenty years or so. Rather than being the predilect spot for the veterans and the retired, it has become one of the most glamorous and praised cities in the world. Nowadays, Miami is synonymous with urban architecture, design, and above all, culture. The city of sun has welcomed millions of immigrants, from Cubans, to Brazilians, Colombians, Venezuelans, Jamaicans, etc., who are part of the reasons why this city is so varied in tastes and colors*. Currently, the Miami International Airport (MIA) has direct connections to some of the largest destinations in the world, throughout the European and even the African continent.

 

All of this has turned Miami into one of the top investment opportunities, so whether you are an individual looking to protect your assets or a businessman who wants to take advantage of the many options this city has to offer, the reality is that the best time to invest is now. That’s why we have compiled a series of tips for you to start a successful journey in the real estate business in Miami.

 

1. Set your goals

This is the first step towards every successful investment, so ask yourself: what do I want to do? Is it buying a property for rent? Or fixing a property to increase its selling price? Is it investing in new constructions? It might even be owning a vacation home that can also be used for rent during the regular seasons, for example. There are plenty of options in this field, so in order to know how to proceed, you must know what you want to achieve.

 

2. Design a short-, mid- and long-term plan

Once you’ve set your goals, it’s time to start materializing them. As any investor, you must plan your moves, and this is highly intertwined with the previous tip. What is your projection one year from now? And five, ten years from now? Is it producing an extra income? Or recovering the total amount of your investment? This part will help you outline the route to achieve your goals.

 

3. Research

Nothing entails more confidence than a good research. Take the economical and geographic elements into consideration. The management figures (meaning your investment capital, state taxes, fees, etc.) and the operational system of the transactions will help you spot the options that are more profitable, also considering that Florida is one of the states in the U.S where rents are more common than home purchases. As for the locations, Miami is pretty versatile, and depending on your plan, some locations will be more suitable than others. For example, Coral Gables and Coconut Grove might be perfect for a large family; for newlyweds, Brickell and Downtown are the best options; while locations like Wynwood or the Miami Design District might be the dream choice for young entrepreneurs or artists.  It will all depend on your vision.

 

 

4. Build a contact network

Getting to know your local bank, or even the people that live in the neighborhood you’re interested in goes a long way. Establishing connections (and having a good credit score, by the way) will build trust for future loans if you come across a good deal. Moreover, asking for the opinion of locals will provide a unique insight into the market.

 

5. Contact professionals

Going through all the process on your own might seem overwhelming, so having professionals to help you offers nice reassurance. Certainly, you’ll need real estate lawyers, brokers, agents, with not only expertise in the field but with your best interest in mind, and here at Miami Riches that’s exactly what we’re aiming for. So, if you’re ready to embark on this journey, we’re more than prepared to be there with you.

 

Diving into the real estate world is simpler than it looks; just follow these few tips and, with our help, your way into Miami’s investment business is secured.

 

 

 

*According to the American Immigration Council, one in five Florida residents is an immigrant.

 

Consequences of the Election in the Miami Market

Either a Republican or a Democrat, we’re all on the edge of our seats waiting to see what will happen with the real estate market in South Florida after 2016’s biggest moment: the election. Donald Trump and his immigration policies were the big winner of the night, so what will happen with Florida?

So, if South Florida’s population is mostly made up of Latin Americans, does this mean that the real estate market is at risk? At Riches, we have the strong belief that it isn’t.

According to Edgardo Defortuna, president and CEO of Fortune International Group (a residential developer), South Florida’s real estate market will be as stable as it has been for the past ten years. South Florida will continue to be one of the best cities in the US to invest on properties.

Defortuna stated that: “If anything, Trump understands how the real estate market works and many of his supporters are major real estate developers and investor”. And moreover: “All his economic policies are for growth and to create new jobs and to jump-start the economy depending on factories going back to work and real estate booming and I don’t see how that could possibly be a negative impact.” 

Therefore, if anything, South Florida’s migration will keep on as it has been in past years, meaning that the real estate market will continue to grow and develop.

Stability is the ultimate goal

“We’re shifting to a buyer’s market, and sellers may have to adjust their expectations.” Jay Parker

The ghost of the housing market crash from 2008 still worries thousands of new investors and real estate owners around the world. Any minor shift feeds the general paranoia despite of what all realtors and experts on the matter say. The market is finally stable and it’s actually growing, especially in cities like Miami where people from all around the world come to invest.

“The report found that in the second quarter of 2016, the number of home sales fell 25 percent in Miami Beach and the barrier islands compared to the previous year. In greater downtown Miami and its major suburbs, sales were down 12.5 percent annually. Even so, they stayed above historical averages.”

Nicholas Nehamas – The Miami Herald

Experts call this a “slowdown”, but what does this actually mean? It means the market is cooling off as a result of a strong dollar and weak economies abroad. Still, this cooling off doesn’t mean a crash at all. Actually, a slowdown without the risk of a crash means stability in the housing market, and apart from the house prices expected to “drop” in 2017, investing in Miami is still a great idea.

What to expect this 2017?

-A solid market but with our feet back on the ground, or the way Cervera Lamadrid put it: “It just won’t be a runaway season”.

-In June 2016, the Florida Home Price was expected to increase 6.8 percent by June 2017.

-Deals involving office and industrial buildings are still going to be the most attractive ones for lenders and investors.

-Investors from the northwestern U.S. attracted to Florida and willing to double down and plant roots in Miami.