Texas A&M and Realtor.com forecast cooling in residential, commercial real estate for 2023

The housing market in San Antonio and nationwide has slowed sharply as would-be home shoppers grapple with high mortgage rates and home prices, making it too expensive for many to buy.

Sales have fallen for eight consecutive months locally and for 10 straight months nationally. Look for that pattern to continue in the new year, a forecast by the Texas Real Estate Research Center at Texas A&M University suggests. And expect to see the various sectors in commercial real estate face challenges stemming from interest rates, along with changes in workers’ expectations and consumer behavior. 

As the Federal Reserve keeps raising rates in its efforts suppress inflation, economists and analysts at the Texas Real Estate Research Center foresee fewer home sales in 2023 than in 2022 because mortgage rates and prices remain elevated for at least the short term.

Price appreciation, however, is expected to moderate and even perhaps turn negative. The center projected such price trends even without the effects of high interest rates, saying that the pace of growth was “never sustainable.”

The Fed has signaled that it plans to continue increasing rates. Higher rates translate to hundreds of dollars more a month in mortgage payments, sidelining buyers, research economist Adam Perdue said.

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