NAR Legislative Conference 2023 Takeaways

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As a member of the Land of the Sky Association of REALTOR®s’ executive team, I was invited to Washington, D.C., to discuss REALTOR® issues that impact real estate, the economy, and legislation at the National Association of REALTORS® (NAR) Legislative conference. I found it interesting to hear the different opinions economists have on the current real estate and financial markets and their thoughts and projections about the immediate future and the rest of 2023. Here are my big takeaways:

1 - Interest Rates - There was a consensus amongst the economists that mortgage rates would probably not come down much this year. They said this is mostly due to the fact that the Fed has been pretty adamant on making sure inflation stabilizes before they’ll consider easing back on rate increases. The Consumer Price Index (CPI) is a common measurement of the cost of living in the United States. Current CPI is still hovering around 6%, which is less than it has been but still well above the Fed’s target of 2%. If you look at their preferred measure of inflation, Personal Consumption Expenditures Price Index (PCE), which excludes energy, food, and shelter, the current price index is at 4.6% vs. 4.9% a year ago. The lack of a substantial decline had one economist predicting that the Fed may even continue to raise rates.

2 - Housing Shortage - There is a housing shortage nationwide. Over the past 2 years, institutionalized investors have been purchasing large amounts of single-family homes. This has exacerbated inventory issues further during an already tight market. It is nearly impossible for a first-time home buyer who needs to use financing to compete against the cash-buying power of these big firms. It’s possible that we’ll see investment purchases slow down due to higher rates; however, until that occurs, it’s an issue that impacts housing markets nationally.

Over the next five years, over 73 million millennials will be turning 40. Historically, this is an age range that sees much higher rates of homeownership than the rates of those a decade and a half younger. If those trends continue, we’ll have to figure out ways to increase supply nationally, or we may be dealing with a significantly prolonged housing supply issue.

Overall, the tone in the meetings was not one of optimism in the short term; however, I do remain optimistic personally. I think whether you need to buy or sell, you can work with your real estate agent to come up with a plan to maximize market conditions in your favor. If you’re selling, the inventory shortage can be a big benefit in maximizing your profits. If you’re buying, the rates being higher could decrease your competition, and you may have options in the future to refinance when rates do come down.