Breaking Down 2023: Essential Real Estate & Economy Insights You Can’t Miss!

A Year To Celebrate And Say Goodbye

Happy New Year! I love that we are bringing in 2024 this weekend, which could not have come soon enough! As you know, personally, it’s been quite a year. My team joined Movement Mortgage, I had back surgery, then eye surgery, built a house, sold a house, graduated my third kiddo from college, and had to downsize my team as the markets adjusted. As we all get to say goodbye to 2023, I want to share a mind-boggling roundup of the major news that hit us each month shaping our industry and hence the psyche of our buyers and sellers…

January

The year started with excitement around ChatGPT as it topped 100 million subscribers in it’s first 30 days. Inflation dropped from a 40-year high in 2022 to 6.4% in January. Mortgage rates opened the year at 6.6%, double what they were a year ago but down from October’s high of 7.32% high, giving buyers more affordability and igniting a short boost to real estate. Microsoft layed off 10,000 employees, Google 12,000.

February

The Federal Reserve nudges up short-term rates by 0.25%, following seven increases in 2022, fueling fears of an economic downturn and rising unemployment​. Consumer Spending and Home Sales both picked up as the economy stayed robust. The Federal Housing Administration (FHA) greenlit a 40-year modification policy, easing affordability for homeowners facing long-term income reductions. Mortgage rates reversed course jumping from 6% to 7.10% as inflation continued to spook the bond market.

March

The collapse of Silicon Valley Bank marked the beginning of the banking crisis of 2023, making it the largest bank failure since 2008 with 4 more to follow. Meanwhile Fed Chair Powell said “The U.S. banking system is sound and resilient. Recent developments are likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring, and inflation.” Trump was indicted and Taylor Swift defied tighter economics by kicking off her billion dollar grossing Eras Tour.

April

The markets seemed tame for a moment as low inventory and suborn mortgage rates continue to stress homebuyers. Inflation begins to decelerate as job growth cooled to a steady pace. Space X’s starship explodes, Bed Bath and Beyond files for bankruptcy and Biden announces he will run again.

May

The Fed raises the Fed Rate another 0.25% to a 16-year high just as First Republic Bank fails and is seized. Several large mortgage lenders start acknowledging financial distress just as the debt ceiling crisis pushes rates to a 22-year high of 7.12%. All of this while 4 of the top 5 data aggregators hit all-time highs on home price appreciation. FHFA released a revised LLPA pricing structure making mortgage rates higher for well qualified home buyers with better credit and bigger down payments. And for Royal Family fans, King Charles was crowned for Britain’s first coronation in 70 years.

June

A US default is narrowly avoided as President Biden suspends the 31.4 trillion dollar debt ceiling, giving rates a 0.25% drop. Inflation showed signs of easing but continued to impact consumers. The consumer price index clocked in at 3.2%, down from the start of the year, but prices for basic goods and services remained high. The Nasdaq has its best first half in 40 years and the Denver Nuggets come out on top as they defeat the Miami Heat for their first ever NBA Championship!​

July

The fight on inflation continues with the Fed raising the Fed rate another 0.25% to the highest in 22-years. Inflation popped back up after 12 straight months of decline. Yet, the US GDP growth exceeded expectations, driven by strong consumer spending and the highest manufacturing investment since 1958. Barbenheimer crushed the theaters and actors went on strike.

August

New home construction stalls as housing starts fell to the lowest since 2020 due to high mortgage rates and weakening demand. Mortgage rates hit another peak of 7.48% dropping mortgage purchase applications to their lowest level since 1995. Existing home sales fell for the 4th time in 5 months, all as the Fed signaled it is in no rush to loosen monetary policy.

September

The government averted a shutdown by punting it 45 days. Stocks had their worst month in 2023. Meanwhile, the Fed’s “higher for longer” permeated the bond market, as the 10-year Treasury yield rose to a staggering 16-year high of 4.71%, concurrently pushing the 30-year fixed mortgage rate to 7.65%, the highest since the Y2K scare. These higher rates, coupled with stubbornly high home prices, have contributed to making home affordability the most challenging in three decades. The United Auto Workers also went on strike against GM, Ford Motor and Chrysler, the first walkout in history to hit all three automakers at the same time.

October

Mortgage rates peaked at 8.0%. U.S. new-home sales dropped significantly in October, falling 5.6% to a seasonally adjusted annual rate of 679,000, indicating a cooling housing market. Yet Aspen listed listed Colorado’s most expensive home for a mere 105 million and Denver sold its 2nd most expensive home at 14.7 million (1st was Russell Wilson’s 25M home in 2022). Student loan payments resumed after being stalled since March 2020; the house speaker, Kevin McCarthy, is removed as speaker, and a war in the Middle East erupts.

November

Despite the geopolitical disruptions, stocks saw their strongest month since 2022. FHFA announce higher loan limits and a 5% down program for multi-family. The first of the NAR lawsuits was decided with a federal jury awarding 1.8M in damages to a group of Missouri home sellers. OpenAI’s Sam Altman is fired and hired, while Cypto’s Sam Bankman-Fried is found guilty. We lost Henry Kissinger at age 100, Rosalynn Carter at age 96 and Charlie Munger at the age of 99. Charlie said “go to bed smarter than when you woke up.” A simple wish for all of us ending 2023!

December

The Fed gave us the gift we’ve all been waiting for! Slowing inflation prompted Fed Chair Jerome Powell to pivot away from raising rates and towards cutting them. Investors applauded sending the stock market to an all time high and mortgage rates continue to fall from 7.1% to 6.6%. Mortgage purchase applications jumped 20%. The U.S. economy has shown surprising strength while the labor market remained robust. Have we ultimately avoided a recession?

As we step joyfully and cautiously into 2024, these developments remind us of how dynamic the real estate industry can be and how critical it is to our success to stay informed and be able to adapt.

For more insights and updates, follow The Rueth Team on all of our social channels as well as YouTube. Please share this recap as a reminder of just how BIG this year really was (make sure to tag me).