The real estate market has been on a rollercoaster ride in recent years, with record-breaking sales volume and prices amid the COVID-19 pandemic. However, the market seems to have found its reversal by the end of 2022, raising the question of whether the peak of the COVID-19 real estate boom has passed.
In this blog post, we'll explore the key market drivers that have affected the residential property market, including low inventory, steady demand, rising inflation and interest rates, supply-chain challenges, labor shortages, and war.
Builders ramped up production in recent years to meet demand and capture the boom in prices, resulting in a cooling market as new homes enter the market. Despite this activity, inventory remains low nationwide, with homes selling on average within three or more months.
Demand for real estate has taken a hit, with sales volume down 30% in some areas. Despite this, buyers are still willing to pay top-dollar for real estate in 2023, despite rising inflation and interest rates.
The stimulus dollars that helped many through the pandemic have dried up, leading to an increase in the cost of goods and services. Additionally, the Federal Reserve has taken steps to combat inflation and cool-down the market by raising interest rates. Rates are expected to climb even higher, impacting the affordability of homes for many buyers.
Supply-Chain Challenges and Labor Shortages Plague Employers
The COVID-19 pandemic and response have shifted the way people buy and sell. Supply-chain challenges like driver shortages, lack of capacity, inflation, shipping delays, increased freight costs, depleted inventory, labor shortages, and other issues have continued to plague employers and those focused on logistics.
The war in Ukraine has created additional inflationary pressures, particularly in energy and food.
Fort Bend County has seen a 26% decrease in new construction activity in 2023, with residential inventory down to pre-pandemic numbers. However, for tax year 2022, there was a 15.5% increase in overall property value, with homestead properties seeing an average increase in market value of 14.76%.
In conclusion, the residential property market in 2023 has been impacted by various factors, including low inventory, steady demand, rising inflation and interest rates, supply-chain challenges, labor shortages, and war. While the market is stabilizing, it remains to be seen how these trends will continue to affect the industry in the coming years.
All information and metrics provided in this report can be found in the Fort Bend Central 2023 Market Trends Report.
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