2023 Real Estate Market Predictions for Investors

The start of a new year is the perfect time for real estate investors to look ahead and finetune their investment strategies. After the housing market’s ups-and-downs over the last three years, investors are relying on experts for the 2023 real estate market predictions to inform their decisions. You want to feel confident in your game plan for 2023, and we want to get you there.

Drew Josephson, real estate agent and founder of Naples Relocation Experts, has spent his career monitoring and forecasting the local housing market. Drew is a born-and-raised Floridian with several of his own investment properties under his belt. Alongside his team, he has built a network of clients, investors, and contractors to successfully navigate the Naples, Florida market. In short, he’s just the man for the job.

We’re utilizing Drew’s valuable insights to help prepare investors for what to expect this year. Here are our 2023 real estate market predictions for real estate investors.

Prediction #1: Mortgage rates are going to improve.

Living room lanai view left kitchen back right
Living room lanai view left kitchen back right

After housing prices reached record numbers nationwide, high mortgage rates have been putting pressure on housing markets everywhere. The current average rates in Florida are 6.43% for a 30-year fixed and 5.63% for a 15-year fixed.

“When rates are high like this, it’s brutal for the market,” Drew explained. “It’s difficult for the stock market and for real estate. The cost of capital is high.”

Whether it will be mid-year or toward the end of the year, the team at Naples Relocation Experts is confident that mortgage rates will decrease in 2023.

Prediction #2: Housing prices are going to go up.

A lot of potential real estate investors and homebuyers are currently sitting on the sidelines, wary of the high mortgage rates. When rates drop, these individuals will re-enter the housing market and create more demand.

Due to the ongoing housing shortage, there is already a lot of scarcity in the real estate market. When rates decrease and demand increases, this will intensify scarcity and housing prices will go up – and fast.

Prediction #3: Naples will continue to be a safer investment than other areas.

Naples, Florida has always been one of the best locations for real estate investors. There are a variety of quality homes and properties, and they sell fast. It’s not a risky “up-and-coming” area. It has been long established as a high-end community filled with unique and luxury homes; and it’s getting wealthier every day.

Part of the appeal of investing in housing in Naples is the affluent residents that live and work here. The median household income in Naples is $125,306 – 77% higher than the national median of $70,784. Due to the demographic that lives here, people are willing to spend money to get the home they want. Higher income families have been living in and moving to Naples for decades, and that consistency makes it a safer investment than other cities.

Take it from Drew: “I’ve had a lot of smarter, older investors say to me, ‘I’ve never lost money in Naples.’”

Prediction #4: Bigger developers will be coming to Naples and Collier County.

There has always been big money that wants to come to Naples. That’s become even more true post-COVID. For the last few years, more and more big businesses are choosing to migrate to Southwest Florida because of the growing housing as well as the proximity to the airport and other amenities.

A lot of businesses are also trying to capitalize on opportunities left behind in the wake of Hurricane Ian. For example, after the hurricane destroyed several condo buildings on Gulf Shore Boulevard, businesses have been going after new development in that area.

What are other real estate market predictions for 2023?

Aerial view of Naples houses as an example of real estate development and why you should invest in Naples real estate
A Southwest Florida neighborhood at sunset near the beach.

In addition to the predictions by the Naples Relocation Experts team, here is what other sources are forecasting for the year ahead:

NAR: National home prices will reach $385,800.

National Association of Realtors (NAR) Chief Economist Lawrence Yun expects home prices in 2023 to reach $385,800, an increase of 0.3% compared to 2022. Yun also predicts home sales to fall by 6.8% in 2023, with the brunt of the slowdown to occur in the first quarter of the new year. Yun attributes the softening to economic uncertainty as well as homeowners being unwilling to trade in a higher mortgage rate.

Realtor.com: 5.4% increase in existing-home median price appreciation.

The team at Realtor.com predicts that home prices will continue to rise, but at a slower rate. They also forecast rent growth of 6.3% in the next 12 months, somewhat ahead of home price growth and historical rent trends.

Florida Realtors: Florida housing will return to a more “traditional” market.

Florida Realtors Chief Economist Dr. Brad O’Connor expects Florida housing to return to a more “traditional” market (like in 2018-2019) as supply-and-demand become more balanced. 

The Urban Institute: Increased use of adjustable-rate mortgages.

Janneke Ratcliffe, Vice President of the Housing Finance Policy Center at the Urban Institute, told USA Today that she expects to see increased use of adjustable-rate mortgages, which made up 12% of total applications in November.

Bright MLS: There will be more variability between markets.

Lisa Sturtevant, Chief Economist at Bright MLS, predicts that different metro areas will start to see differences in demand in 2023. Sturtevant stated that “Zoom towns” that drew in remote workers during the pandemic will see home prices fall significantly. However, markets in the South and Midwest will remain in demand.

Jonathan Miller: Housing inventory will remain low.

Real Estate Appraiser Jonathan Miller, who prepares the monthly Douglas Elliman Real Estate report for New York City, told USA Today that, “Excess supply is not the story for 2023.” Miller predicts that the housing shortage will continue through 2023.

U.S. News: Home rents will flatten, then rise.

U.S. News expects that, “After jumping in 2021 and most of 2022, rent increases have been flattening in recent months, and will likely rise in the mid-single digits in 2023.” 

Should you invest in Naples real estate in 2023?

Waterfront Home in Naples
Waterfront Home in Naples

Based on our real estate market predictions and the current state of the market, 2023 is a great time to invest in Naples. Lower mortgage rates and increased housing prices are on the horizon – and now’s the time to take advantage. With the right team behind you, 2023 is filled with investment potential.

Looking for more information on Naples real estate investing? Check out our previous blogs:

If you liked our 2023 real estate market predictions for investors, you’ll love the other advice and insights our team has to offer. Our own team of expert investors are uniquely equipped to help you develop successful real estate investments in Naples. Contact Naples Relocation Experts today and start making money on the Paradise Coast.

Drew Josephson
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