Compass agents predict a buyers market, local growth in 2023
Economists have offered their take on the year ahead, but what about the on-the-ground perspective? See what Compass agents expect to see in 2023.
Key points:
- More than 86% of the 440+ Compass agents surveyed believe the market will become more balanced or even favor buyers.
- A majority of agents expect to see greater interest in urban living as pandemic worries wane.
- The annual agent survey was conducted the second week in December across the U.S. markets that Compass serves.
The balance of power in the real estate market will favor buyers in 2023, if Compass agent predictions are correct.
More than 440 Compass agents from across the country participated in the annual survey, with nearly 87% expecting to see a shift away from the sellers market of the past two years — one of the strongest findings among the agents surveyed, Compass reported.
Agents were also quite optimistic about local markets, in contrast with their lukewarm sentiment about the national market: Nearly 80% of agents expected home prices to remain flat or decline nationally in 2023 — but more than 68% believed local prices would stay the same or grow.
Similarly, nearly a quarter of respondents expect to see an increase in sales volume locally, while only about 16% predicted a national bump in volume.
When asked about regional performance, the Southeast stood out. It was the only region to garner a majority of positive predictions around sales and price growth, with agents expecting it to fare better on both counts compared to the nation as a whole. The region, particularly Florida, continues to see some of the highest growth and greatest numbers of relocating buyers.
When asked about housing and lifestyle preferences, more agents predicted a return to cities and a greater interest in shared community amenities compared to 2022 — and less interest in large yards.
About 59% of agents surveyed agreed that condos will make a comeback as more people return to in-person work, prioritize community amenities and — perhaps most importantly — seek out more affordable housing options.
In other survey results:
About 62% of respondents predict mortgage interest rates will settle between 5% and 6% by the end of 2023, consistent with several economists' expectations.
Nearly three-quarters of agents polled believe the rate of first-time homebuyers will stay the same or decline next year. The share of first-time buyers dropped to a historic low in 2022, according to NAR.
While the Southeast was the regional favorite, the Southwest and Pacific West regions were also expected to perform better overall relative to national benchmarks — with the exception of price growth.
Neda Navab, president of U.S. regional operations for Compass, said she expects the market to "rebalance" in 2023, which should increase housing inventory, make home prices more affordable and lead to a more sustainable market.
It may take some time to see that shift, said Leonard Steinberg, Compass broker and chief evangelist, who believes 2023 will be a "mirror image" of this year. He predicts "a somewhat trying first half that gives way to a surprisingly strong back half of the year."
"Would-be buyers that stepped back from the market in late 2022 can't and won't stay away forever," Steinberg said.