With concerns about supply chain disruptions, inflation, and the long-term effects of the pandemic, the real estate market is currently experiencing a lot of turbulence. In this article, Rani Jarkas, the founder of Cedrus Group, will give out 3 predictions about the real estate market for 2023.
- Decrease in House Prices
The price of houses will decrease in the coming year. With increasing inflation, the interest rates of loans, which is the cost of borrowing one, will increase. The effect is a lot fewer people will be able or willing to get these loans. Because of this, the cost of buying homes will decrease. This is a clear indication of the market turning, and the result is usually lower house and home costs to compensate.
- Housing Glut
The number of houses that are being put on the market has increased in 2022, with many of these homes being in the expensive home category. Many buyers will not be able to buy these homes due to the reasons discussed above. Seller activity is set to increase because sellers are more willing to sell, perhaps due to inflation, but buyers will still be reluctant to buy due to the same reasons. These two phenomena will cause a housing glut, which is already being experienced in the renting space in some parts of the United States.
The bottom line is that there will be more houses for sale and rent than the number of people willing to rent, buy or invest in them.
- Tighter Lending Requirements
One reason why inflation is so high right now is that there is a lot of money in circulation. Governments around the world are trying to arrest this situation, with the US government considering tapering, which will take money out of circulation.
Less money means lenders have less to lend. Banks and lenders will have to tighten their borrowing terms, and considering the fact that buyers make up a sizable portion of lenders, this could cause cascading issues down the road.
Rani Jarkas is a highly experienced and accomplished financial services executive at a global investment firm. Rani Tarek Jarkas and his firm render quality, customized, complete suite of strategic advisory and investment banking services to innovative and emerging technology companies worldwide.