2022 was a bumpy year for everyone residing in the United States due to shaky economy. Many hoped for a better 2023. However, 2023 has had quite a rough start as well. Here’s more than just some Real Estate Market Updates for the month of January 2023
Despite having slight improvements in inflation, consumer sentiment, and lower unemployment numbers, both housing market and the US economy still need to overcome many challenges. Within less than 1 week of the new year, many giant tech companies either took action or announced more headcounts reduction, which left thousands of professionals jobless and others fearful of a negative outcome in future economy. Additionally, with the interest fluctuating within the past couple weeks after the Federal Reserve raised rate again in December of 2022, homeowners and buyers are left uncertain on their next course of actions.
Housing Demand Falls with Rising Interest Rate
Right before the end of 2022, the Fed announced yet another 50-basis point rate hike, which pushed the borrowing rate to the highest level in 15 years. With inflation rate improving but still remaining high, many expected more rate hikes until the 2% goal is met.
With the rising rate, sales of existing single-family homes decreased to an estimate of 237,740 in November, which is considered the lowest since the Great Recession. As we transition to the Buyer’s market, for the very first time, the statewide median price dropped year-over-year for the first time in 30+ months due to weaken competitive environment.
Prices remains high despite a dip in Inflation Data
Consumer prices increased by 0.1% in November 2022 comparing to October and increased by 7.1% from November 2021 according its index tracking. Though the Fed stated that the inflation number has been improving to a healthier level, it still did not meet the target of 2%. On the bright side, it is expected to continue to slow down in 2023 as the Fed continues to roll out many aggressive combat plans.
California Unemployment Rate Creeps up but remain low still
At the end of Q4 2022, unemployment rate in California increased to 4.1% as household employment levels trended down by more than 40,000 for the second month in a row, according to the survey of households. As a matter of fact, California was one of 26 states experience an increase in unemployment rate.
My Personal Take
Did California hit rock bottom yet? My answer is “probably not”.
We all expect some sort of magic would happen when the ball dropped at midnight but unfortunately we are still facing the same old challenges in 2022. However, I personally think the housing market in California, though is quite near the bottom, will have a more positive outlook toward the end of 2023 and beginning of 2024 as the market corrects itself.
With everything going on in the US economy, we are slowly making progress toward a healthier inflation level and interest rate will eventually drop, just like any previous cycles. Now may seem like a depressing recession period, we all must do our best to prepare ourselves mentally and financially before the next hot market arrives.
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