It’s report card time. Every year I make predictions on what I think the year will hold for residential real estate so let’s go ahead and show you my predictions for 2023 and we’ll grade my work together.
Here is the link to the post with the predictions if you want to see all the context and the “thinking behind the thinking.”
As I reread my predictions I am struck by one thing: I had more caveats than a teenager trying to explain why they got home after curfew. 2023 was as hard a year to read as any I have had in my 25+ year career and this came through in the writing.
Prediction Number One: “I am going to officially be in the “soft landing” camp (but I’m like camped on the edge of the camp, near the road to “hard landing camp” and I’m only ¾ unpacked).” Welp since there was no recession I guess I got this one kinda right. I’ll give myself a B on this one since I didn’t think there would be a steep recession and no recession is, indeed, not a steep one. Somehow “how steep a recession will there be” is no longer in people’s minds again going into 2024. I’ll be putting out this year’s predictions in January so you’ll have to wait for that to know what I am seeing (guessing).
Prediction Number Two: “My call is rates will be volatile as we head into recession and will bounce around, but the overall trend rate will be flat to down.” This one is a tough one to grade. Literally three weeks ago I would have been flat wrong. There has been some considerable downward pressure on rates but let’s look at January of 2023 rates. “According to Bankrate, the mortgage rates for January 2023 at the time of writing this are: 30-year fixed-rate mortgage rate: 6.42%” They’re dipping under 7% as of today, and I’ve seen them basically at 6.5% in some sources. So basically flat with a LOT of movement throughout the year, mostly up. I will be generous to myself and give myself a C- though you could easily give me a D and I couldn’t argue.
Prediction Number Three: “I will go on record and say that buyer sentiment will be higher this year than it was at the end of last year.” Another tough one to measure. I think I’d say that the buyer sentiment stayed strong through most of 2023. There were moments where the pace of change in rates caused them to back off but they kept coming back and demand overall was high. So… I think I’ll go B here.
Prediction Number Four: “I will say we come in at about 4.3 million again (in units sold)” Well the year isn’t over but we aint hitting 4.3. Most of what I look at says we’ll be lucky to hit 4. I did have the valuation correct and I even had a caveat that rates would need to stay below 7% which they most definitely did not. I got the appreciation right and the units wrong, but gave myself a trap door. Let’s call that a B minus (I guess?).
Prediction Number Five: “There is a lot of noise, saber rattling, and fear, but zero clarity. I am in no way dismissing the importance of the Department of Justice and National Association of REALTORS® lawsuit, all I am saying is that there will be very little clarity in 2023.” Considering the number of podcasts we’ve done on the lawsuits I guess I didn’t follow my advice on focusing on what I can control. BUT I think I got it right in that while we have had a ruling, and have had some decisions made I don’t know that I would call the state of affairs around the lawsuits as more “clear.” However, if I am being honest I guess they are slightly more clear than they were a year ago… so how about a B- for this one too?
So there ya have it. All B’s and one C (could be a D) not terrible considering the crazy real estate world we all experienced in 2023. What I am most struck by is (basically) most of my thinking was correct and the logic was sound, but the outcomes were not what I expected. It reminds me of this Charles F. Kettering Quote: “Logic is a system whereby one may go wrong with confidence.”