I wish to share some thoughts about what to expect in the Adirondack real estate market in 2023. First, 2022 was a strong year with lots of changes: interest rates rose from 3 to over 7%, local short-term rental laws were revised, “Covid-pricing” became a thing of the past, and selling activity dropped by 19.6% - with an average sales price of $314,197 (consistent with 2021’s $314,165). In fact, sales were down a full 24% from October to December, compared to the final quarter of 2021.
How best to navigate the local market in 2023? Know this:
- It’s all about supply and demand. A “balance market” requires 4-6 months of inventory. Currently, we have less than 2.5 months. A lack of inventory means home prices will either stay consistent or increase slightly in 2023.
- First-time homebuyers can seize the opportunity to purchase a home in 2023 by using one of the first-time homebuyer stimulus programs, including a $15,000 First-Time Home Buyer Tax Credit and the $25,000 Downpayment Toward Equity Act.
- Mortgage rates might continue to rise, but at a far slower pace. If inflation remains high (along with geopolitical tensions, labor shortages, and supply chain issues), then the Fed will likely continue to raise the benchmark. Some forecasters are predicting a high in mortgage rates of 8 - 8.5%.
- The real estate market will regain a sense of normalcy. With prices stabilizing, interest rate increases slowing, and property options increasing, we are likely to see fewer “bidding wars” and increased days on market.
- Short-term rental regulations will continue to affect specific markets. Laws in Lake Placid/North Elba are likely to restrict values of income-producing properties, sending many homebuyers to Harrietstown, Wilmington, Tupper Lake, and, most significantly, the Town of Jay.
Overall, we can expect a more balanced real estate market in 2023. I won’t be surprised to see slight changes in mortgage rates or moderate home price increases. While some buyers may remain cautious about purchasing a home, others won’t be content to wait for a price drop that will likely never happen. “Fortune favors the bold” could be the 2023 mantra, as homebuyers consider a larger inventory of homes for sale and work with sellers who are more apt to negotiate.
While I don’t own a crystal ball, I do follow the data and forecasts. Over many years - and in all kinds of markets - my clients have bought and sold properties at the best possible prices. Know that I am available 7 days a week to discuss your real estate needs and offer any advice.
