The California Association of Realtors (CAR) and the National Association of Realtors (NAR) have released their annual market outlook for the coming year. CAR is a state-wide outlook that provides context for what may happen in Silicon Valley. Here are some of the take-aways.
Median Prices – CAR is forecasting a 8.8% decrease in the statewide average median following a 5.5% increase in 2022 compared to Silicon Valley showing a 7.7% increase in 2022. NAR is forecasting a 5.4% increase in 2023 for the nationwide average following a 10% increase in 2022. My forecast for Silicon Valley is for median price for a 4% increase in the annual median price following a 6% increase in 2022.
Interest Rates – NAR forecasts rates will remain close to today’s levels in 2023. My expectation is that rates will return to 2013-18 levels of around 4% in 2024-25.
Federal Reserve Rate – CAR expects the Fed rate to increase slightly during 2023 and then decline in 2024 as inflation begins to cool off. It does not appear that the rate will return to near-zero levels that followed the global financial crisis and the Covid pandemic.
Inflation – appears to be at its peak and expected to return to normal levels over the next two years as consumer demand slows down due to higher interest rates and the global supply chain returns to normal levels.
