Real Estate Market Predictions 2023: What Experts Say About California

Soaring Home Prices May Finally Cool Down

California's real estate market has been on a wild ride in recent years, with home prices skyrocketing to record highs. But experts say that the market may finally be cooling down in 2023.

A recent report from the California Association of Realtors (CAR) predicts that home prices in the state will increase by just 2.8% in 2023, down from 10.3% in 2022. The report also predicts that home sales will decline by 7.2% in 2023.

Interest Rates Continue to Rise, Weighing on Affordability

One of the biggest factors contributing to the slowdown in the real estate market is the rising interest rates. The Federal Reserve has been raising interest rates in an effort to combat inflation, and this has made it more expensive for buyers to get a mortgage.

As of January 2023, the average 30-year fixed mortgage rate is 6.13%, up from 3.11% a year ago. This increase in interest rates has made it more difficult for buyers to afford a home, and it is likely to continue to weigh on the market in 2023.

Impact on the Rental Market

The slowdown in the real estate market is also having an impact on the rental market. As more people are unable to afford to buy a home, they are turning to the rental market, which is causing rents to rise.

A recent report from Zillow predicts that rents in California will increase by 6.2% in 2023, up from 4.8% in 2022. This increase in rents is likely to make it more difficult for renters to find affordable housing.