During a session titled “Your Inside Look at the 2023 Housing Market,” Inman Connect New York panelists said real estate companies and consumers are “adapting to the new reality.”
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The 2023 housing market will turn out better than expected, Inman Connect New York panelists predicted on Tuesday.
Panelists Tamir Poleg, CEO of brokerage firm Real; Nate Levin, managing director of proptech venture capital firm Parker89; and Chen Zhao, Senior Director of Economics at Redfin, spoke at a session titled “Your Inside Look at the 2023 Housing Market.”
Poleg argued that the current slowdown in the housing market is a “good thing” after the blistering pace of sales in 2021 and the first half of 2022.
“It’s the market correcting itself because the way the market has behaved in 2021 and 2022 is just not sustainable,” Poleg said.
“So I think it’s a natural thing that happens in the market from time to time.”
The uncertainty in the economy makes 2023 “one of the hardest years to predict,” according to Poleg.
Still, “I think 2023 will probably be a lot better than we all think and a lot better than what the media is telling us,” he said.
“We will likely see the psychological effects of consumers adapting to the new reality that started in 2022. Whenever the [mortgage] rates go up, buyers take a break, then they go back to the market. »
Zhao said she was “cautiously optimistic” about the housing market due to falling inflation and mortgage rates and a pick-up in home sales.
Nonetheless, “recession is something we should be thinking about,” she said. “It won’t be like 2008, but it’s still a risk.”
The economy is basically coping with the effects of the pandemic, she noted.
“I see no fundamental reason why the US economy should be in a prolonged downturn,” Zhao said.
Although she described the Federal Reserve’s interest rate hikes as “a hammer blow to the economy,” the effects have been “very positive,” according to Zhao.
“If we were to write a script for the so-called soft landing in the fall, that script would look like what we’re going through right now.”
Levin noted that the hot real estate market had created an environment in which many companies “were able to grow very quickly and build a ton of momentum very quickly”, but now companies are “introspecting” and wondering what the value is. real they’ create for buyers, sellers and agents to compete against.
“From a venture capital perspective, we saw another $7 billion go to proptech companies last year,” Levin said.
“There’s a lot of opportunity for companies to keep doing things and we’ll see how that plays out.”
“There’s a lot more money going into it in this country than anywhere else in the world,” he added.
Poleg pointed out that “difficult times push people to innovate” – which he said was badly needed given that buyers and sellers still have more or less the same transaction experience as they did a decade ago.
“We have to be frank and ask ourselves, have we really created something meaningful for buyers and sellers?” said Poleg.
“Consumers are not really happy with the service we all provide. They expect more transparency, more control, more convenience, and we still don’t provide that. »
He said he was starting to see innovation on the mortgage front towards a more seamless, end-to-end experience.
Still, Levin predicted it would take years for the technology to advance enough to “move the needle.”
Panel moderator Clelia Peters, managing partner of Era Ventures, pointed out that the financing entering real estate in recent years has accustomed agents to “benefits” that incumbent brokers have to “cut to the bone ” to provide, but which are now disappearing.
Levin anticipated a “reset” in this regard due to market easing.
“I think that’s good, because you’re providing more natural competition,” Levin said.
“There’s still $600 billion of dry powder in the pockets of VCs somewhere. There will still be a bit of a rush to get that capital, but overall I think the pressure should ease a bit.