This may be our last blog of the year and I know many of you reading this are making real estate related plans for 2023. If you are, we should talk right now. There are many confusing things happening with both the overall economy and the real estate market and as you make your plans it’s important you have accurate information and you are interpreting what’s happening correctly. I certainly don’t have a crystal ball, at least one that isn’t foggy, but I may be able to point you in the right direction by giving you a few things to think about that will make your plans easier and more profitable. To schedule a time for a conversation, call 512-791-7473 or schedule online at KopaConsultation.com. How Was My Crystal Ball In January?
I thought it would be fun to look back at the 5 predictions I made in our January issue and give myself a grade for each one.
#1 – The Market Will Start Hot Followed By More Listing Activity. A+
I predicted the first quarter of the year to look similar to 2021 with low inventory and low interest rates. I said, “the question sellers have to ask is do you want to sell when you are the only game in town or wait until you have lots of competition.”
I couldn’t have been more right about that.
#2 – Property Tax Assessments Will Push Sellers Into The Market. B
We did see some sellers motivated by property taxes decide to sell and move to lower cost areas. In the end with lower overall tax rates many homestead property owners did not see as large increases in property taxes as I expected.
Where I was right, but perhaps a year too soon, was when I said “the 2022 values will be especially painful to investors who don’t have the advantage of a homestead exemption cap.”
Tax bills are just now going out. We will see more investment properties sell next year. In particular I expect we will see many of the owners who bought another home and turned their previous homestead property into a rental property sell. The jumps in property taxes owed on those properties is particularly painful and I know many in that situation did not understand how high their mortgage payment would go. That will be especially painful early next year when the mortgage companies do their escrow analysis and recalculate mortgage payments off the new tax bill PLUS increase the payment to reflect a larger amount of taxes the mortgage company fronted because there wasn’t enough to pay the taxes in the escrow account.
#3 – Mortgage Rates Will Increase. B-
I predicted mortgage rates would increase and I said “the real danger is if rates go up too far too fast that will cause problems with the real estate market.” I’m only giving myself a B- because I had no idea we would see rates hit 7%. In fairness to myself, nobody expected interest rates to rise as fast or as high as they did this year. The leading economists were predicting rates would hit 4% by the end of 2022 and 5% by the end of 2023.
#4 – 25,000 Austin Board of Realtors Members. B+
We didn’t quite hit 25,000 but it did seem like at the beginning of the year everyone was getting their real estate license. As sales slow down, many agents will be leaving the business so that number will start to come down.
The last statistic I saw said almost 2/3 of the members of the National Association of Realtors had only sold 1 home or less all year. That’s important for you to know because you may be relying on information from someone who may have a real estate license but may not be giving you good advice. Especially since so many agents have gotten into the business in the last 2 years, they won’t have the experience to help you navigate today’s market. I’ve had a real estate license since 1995 and I have been through all the ups and downs of the real estate business since then so you can count on my advice to help you make good decisions.
#5 – People Who Make A Plan Will Be Successful in 2022. A+
I often compare real estate to dating and much like I have to remind my friends if they want to meet someone they might have to actually leave their house, last year I said “if your goal for 2022 is to buy or sell real estate it’s going to take a plan and you’re going to have to take some action.” The same can be said for 2023.
The people who contacted me at this time last year got great results. It wasn’t by accident, they got a great result because together we were able to put together a plan that resulted in them getting a great result.
If you have real estate related plans for 2023 let’s talk. To schedule a time for a conversation call 512-791-7473 or schedule online at KopaConsultation.com.
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