What Lies Ahead for Real Estate in 2023?   

Before looking forward, it’s helpful to look back. The beginning of 2022 was a continuation of 2021 — high demand, tight inventory, low interest rates, escalating prices and bidding wars! It was a frenzy, to say the least. But, frenzies don’t last forever, and the end came when the Fed increased interest rates. Rapidly. In December of 2021, rates hovered around 3 percent. Today, the interest rates are in the 6 to 7 percent range. Higher interest rates and their impact on housing affordability caused the market to slow and the second half of 2022 finally saw a correction to the prolonged red-hot real estate market.

Looking at Hawaii Real Estate in 2023

So, what does this all mean for 2023? According to many real estate experts, our lack of inventory in Hawaii will continue to support our overall real estate market. We have a dearth of new construction, and sadly, there is no foreseeable solution to Hawaii’s housing shortage. Simply put, we’re not building enough homes or multi-family units. Plus, Hawaii property owners behave a bit differently than their mainland counterparts. On the mainland,  properties typically turn over every 7 years or so, but property owners in Hawaii often buy and hold. Forever. It’s a bit of a perfect storm — low inventory, no new building starts, and high demand. Yes, demand for Hawaii remains high. People are still moving here and Buyers still need homes, even if higher rates mean less affordability. It all comes down to supply and demand.

All About Supply and Demand

So, what lies ahead in 2023? Since it all comes down to supply and demand, real estate values won’t crash. Yes, we will see fewer sales and some price softening. And, homes will sit on the market longer. But, 2023 will simply see a return to a more steady, stable and balanced market. And, after the dynamics of the last several years (and not just as it relates to real estate), doesn’t steady, stable, and balanced sound good? So relax and enjoy the ride.  Hawaii real estate is still a safe and secure investment. And, a very good bet!