Featuring the perspectives of:

Colleen Barry, CEO, Gibson Sotheby’s International Realty
Pauline Bennett, President, Coldwell Banker Realty – New England
Jeremy Collett, Executive Director of Capital Markets, Guaranteed Rate
Jim D’Amico, President and CEO, Century 21 North East
Marc Decker, Regional Vice President, Compass
Sue Hawkes, managing director, The Collaborative Companies
Anthony Lamacchia, Broker/Owner and CEO, the Lamacchia Companies
Chris Raveis, President of Residential Sales, William Raveis Real Estate & Affiliates
Lisa Rainis, Executive Manager of Sales, Douglas Elliman
Nick Warren, Founder and CEO, Berkshire Hathaway HomeServices Warren Residential

What do you expect for the overall housing market in 2023?

Colleen Barry, Gibson Sotheby’s International Realty: Generally speaking, we expect the pricing to remain mostly flat, with small price increases in some areas. However, the number of transactions is decreasing and expected to hover around pre-pandemic levels or slightly lower. The market is mostly affected by the low supply and higher demand. We expect to see the broader market trends break up into micromarkets. Some of these will be more impacted by mortgage interest rates than others. Some will be affected by the new commute radii from the continued work-from-home trend. Others will be affected by neither.

Pauline Bennett, Coldwell Banker Realty – New England: We are currently coming off two years of a “white hot” sellers’ market, with rising interest rates starting to cool this trend. Despite these increases, buyer interest remains strong. However, their purchasing power can be impacted. Sellers who are value-priced with move-in ready conditions will likely have the advantage in 2023.

Jeremy Collett, Guaranteed Rate: We can forecast, but nothing is certain. The Mortgage Bankers Association (MBA) believes that housing prices will likely level off, but the higher-rate environment will mean that fewer homes will sell or refinance in 2023. By buying low in a cooled market, once prices heat up again, the steady build in home equity offers many advantages: dropping PMI (if applicable), taking out a HELOC to invest in home improvements or refinancing with more favorable terms. No matter what, I think we will see a return to seasonality, with a focus on home sales in spring and summer when people are more inclined to move.

Jim D’Amico, Century 21 North East: I think the market will be sluggish in 2023. Lack of Inventory, higher interest rates and only a moderate reduction in price will make 2023 one of the toughest years in recent memory.

Marc Decker, Compass: High interest rates will continue to put pressure on the housing market in Greater Boston in 2023. The number of transactions will slow, as will the rate of appreciation. But the great schools, terrific universities, and proximity to world-class healthcare that are hallmarks of the region will continue to prove attractive, and I think the real estate market in Greater Boston will fare better than many other areas of the country.

Sue Hawkes, The Collaborative Companies: 2023 will prove challenging, the rapid interest rate rise slammed the door on the robust trajectory of the double-digit appreciation that Boston has enjoyed during the years since COVID. The speed of the increase has left the market in “sticker shock.” Although the current rates are not historically high, we have been spoiled over the past several years with historically low rates, which simply were not sustainable.
However, Boston has proved to be incredibly resilient. With an enormous pool of talented human capital, world renown institutions, medical and research facilities and high-income earners, we are well positioned to weather the pending storm.

There will be few new buildings being offered for sale next year and potentially even fewer approved to proceed, all thereby reducing the already insufficient housing stock. Sellers are holding back supply and buyers are reticent to consider mortgages double what they were last year. 2023 will be a year of adjustment.
However, this “adjustment” period should evolve during the year. Alternative mortgage terms will become available, equity rich buyers will be in the market, looking for opportunities and first-time buyers will be pushed due to ever climbing rental rates.

Boston will experience a significant reduction in absorption, but prices will remain stable. There is still too little supply, significant equity and sellers who are in no rush to liquidate. All these factors will support a relatively stable pricing model. Once the world stage settles down and the Fed succeeds in managing inflation, there should be an uptick from all of those who waited on the sidelines.

Anthony Lamacchia, The Lamacchia Companies: Much of this depends upon what happens with interest rates. If they come down, things will pick up again. If they go even higher in the spring, stay high in the late spring and summer, which is what I expect, then I think it will be another slow year where sales are even lower than the 2022, and truthfully, I think that’s what’s going to happen.

Chris Raveis, William Raveis Real Estate & Affiliates: The housing market will continue to slow down from 2022 levels. The good news is that inventory will slowly begin to build back up, but will be tight versus historically high levels. In addition, median prices will decline and mortgage rates could increase up to the 8.5% range, making it challenging for some buyers and sellers.

Nick Warren, Berkshire Hathaway HomeServices Warren Residential: The lack of inventory should keep the overall market stable. However, I expect some markets to see some price depreciation due to the reduced demand due to interest rates.

Do you think any segments of the residential market will be better in 2023? (new construction, rural, luxury, etc.)

Hawkes: The most prolific market segments will continue to be the equity rich, high end of the market as well as the entry level consumer. Although interest rates will play a large part of the decision process with the latter, that group will have more flexibility because they won’t have anything that they need to sell. With accelerated rental rates, the decision to consider buying will be contemplated. Once the “interest rate sticker shock” wears off, they will look more favorably to an ARM mortgage product.

The high-end buyer has many options, is more insulated and does not necessarily have to sell to buy. That group still desires an amenitized product in a new building and the best selections are narrow.

Warren: I don’t expect any specific segments to do better year over year vs. 2022, but I expect some to hold up better than others. The luxury markets will likely not be as affected by rates as lower price points and first-time buyers are. Those markets with many wealthy buyers with cash, or the ability to get lower rates based from private banking relationships, are likely to remain reasonably stable.

Barry: In 2023, new construction or move-in-ready homes will continue to outperform properties that require significant updating. Luxury properties are also expected to remain strong.

Collett: It’s hard to predict, and it may vary by market. Remote workplaces have allowed many homebuyers to explore non-urban communities, including smaller towns and even more remote areas. Rising housing demand in Montana and Wyoming is proof of that. Both new and luxury construction will likely remain strong in areas with recession-proof industries. As supply increases and demand wanes, we could see many cities enter buyer’s markets.

The affordable housing market will see some growth with the recent pricing changes instituted by Fannie Mae and Freddie Mac. With home equity so high after the home price increases of the last two-plus years, HELOCs and home equity loans should be popular. Looking at the top end, jumbo and non-qualifying loans, particularly those for real estate investors like debt service coverage ratio (DSCR) programs, will likely continue to grow.

D’Amico: Luxury will most likely struggle in 2023. Starter homes and more rural communities will stay strong. Starter homes should also maintain consistency due to owner’s needing increased space and lots of entry buyers available in the market.

Decker: Overall, the Greater Boston market — like most large markets nationwide — needs more housing of all types to meet demand that is high and expected to stay high for the foreseeable future. The rapid rise in prices over the past few years has been driven, in large part, by exceptionally high demand and relatively limited inventory at all levels. Higher-end housing developments currently in the pipeline will fill a need, but cannot be the sole focus of developers in the area. A healthy mix of affordable, mid-market and luxury units, as well as rental units, are what’s truly needed to ensure the market is meeting the needs of all our residents.

Bennett: Ultimately, it will all come down to price and condition in every segment because no one wants to overpay.

However, for the luxury sector in particular, Coldwell Banker’s 2022 Trends Report found that on a national level, 80% of U.S.-based high-net-worth consumers agree that real estate is a safe investment, and over one-third agree that it is the safest investment one can make when compared to stocks, bonds, cryptocurrency and pensions. It is possible that these sentiments will positively impact the luxury sector into 2023.

Raveis: Lower and middle ranges of the market will be affected most because of rate-sensitive buyers. Luxury buyers will be affected less if they are in a decent cash position. These buyers, nationally and globally, continue to see real estate as a safer investment than an unpredictable stock market. Luxury buyers are also mindful of prices declining and will not hesitate to make a purchase at more reasonable market prices versus those obtained in the frenzied bidding wars over the past two years.

Lisa Rainis, Douglas Elliman: New development for Boston — “Yes,” with the launches of The Parker (from Douglas Elliman), the St. Regis and raffles. Get ready for some pretty impressive results and perhaps some new record sales and dollars per square foot. 

What growth, if any, do you expect for your company next year? Do you expect your business to thrive, decline or remain stable? Why?

Decker: The best agents gain market share in a downturn. We see many Compass agents increasing their business year-over-year, and I expect that to continue in 2023. Agents need every advantage in this market, and Compass’ unique, end-to-end platform helps our agents grow their businesses, serve more clients, save time, and stand out as valued, trusted and professional advisors in real estate transactions.

Warren: Whenever there is uncertainty in a market, we see some people head to the sidelines until they can get a clearer picture of how things are going. Based on this fact and what we are already seeing in Q4 of this year, I expect 2023 to see less sales volume in Q1 or Q2 of 2023 than in 2021. However, we are looking at this as an opportunity for the agents in our brokerage. We will see many part-time agents who do 1-4 deals a year leave the real estate business, allowing full-time, professional agents to grab market share and grow their business. Our agents remain focused on the long-term foundation of this business which is creating and nurturing relationships.

Barry: We are expecting growth. The reason is twofold: First, when market conditions are uncertain, consumers show a “flight to quality”. This means they will go to experienced agents with a great reputation. We have been in business locally for 60 years and our brand has been in business since 1744 — that is a legacy that will attract people. The second reason is that many part-time or newer agents are expected to leave the industry. This is what has happened in the past when the number of sales dropped significantly. We know that those clients will likely come to an agency that has a reputation for expertise.

Collett: The housing market, much like the economy, is cyclical. It never heads in one direction for too long before adjusting. When things slow, opportunities arise to prepare for the next comeback. That way, when the tide does turn — and it will — we are fully prepared to ride the next wave instead of reacting to it in the moment. That’s why we continue to invest in technology to provide the best customer experience possible. We have a strong business plan in place for 2023, which is focused on fully supporting our loan officers. We offer a unique environment to set them up for success, including:

• The CEO Mindset™: When markets cool, winners with the right mindset emerge. The GR philosophy allows LOs to be the CEO of their business. They have a team they can delegate marketing and administrative tasks to so they can focus on growth.
• FastTrack: While banks can take weeks and months to close, our FastTrack program can get customers a CTC (clear to close) as fast as 24 hours and to the closing table as fast as 10 days.
• PowerBid Approval: This helps customers compete with all-cash offers. This fully underwritten credit approval shows sellers that the buyer is a qualified loan candidate and can close at the same speed as an all-cash offer.
• Pricing flexibility to win: Guaranteed Rate’s LOs control their pricing and offer the best array of products to customers, such as Lock ‘N’ Roll, which lets buyers lock in today’s mortgage rate for 90 days while they house shop with no commitment to buy.
• Dynamic Marketing. We have the best-practice model to constantly stay in front of your potential customer network.

Hawkes: Since our company relies 100% on new construction, the current cost of capital and debt absolutely affects our client base. Aside from the projects currently underway, 2023 will focus primarily on our consulting roles with future projects.

Lamacchia: We expect our business to grow, despite the market headwinds, simply because we are in the midst of acquiring other companies. Now that the market has slowed down, our acquisition opportunities have substantially increased. However, I am fully willing to admit that it’s a dog’s fight to keep our business up right now.

D’Amico: Our company continues to grow through agent-centric programs to assist top agents in growing their business coupled with technology, marketing, support and training. We also continue to increase market size and strength as well as agent count through mergers and acquisitions.

Raveis: We expect continued growth within our current footprint in the Northeast and Florida. We have already seen a lot of agents who are seeking a long term business home where marketing tools and resources are necessary to effectively build their businesses. We have that innovation and the technology to empower them in a highly competitive listing market.

What will be the biggest challenges for agents in 2023?

Raveis: In 2023, the biggest challenge for agents will be to manage homeowners’ expectations. A neighbor’s home that sold just three months ago is not a good comparable anymore. When a market shifts, homeowners will lag six months behind when it comes to pricing. Realtors will have to be patient and empowered with data to justify trending prices and where homes should be listed.

Decker: Agents have become accustomed to the frantic pace and associated challenges of the past two years, characterized by record price increases and sales volumes. But that level of activity was well-above historic norms, and was never expected to last forever. Agents need to realign and reprioritize their activities to a more balanced market while at the same time remaining flexible enough to move quickly as the market shifts.

Lamacchia: The biggest challenges will be the lack of motivation from both buyers and sellers in 2023.

Warren: Agents’ most significant challenge in 2023 will be ensuring that their clients aren’t making decisions strictly based on the headlines. Our job is to get ahead of the negative news and educate buyers and sellers on what is happening in our local markets.

Barry: There will be several challenges for agents in 2023. First, they cannot rely on the skills that made them successful for the last decade. When the market shifts, you need to change your approach to the market and refine your skill set to meet new consumer demands. Next, strategic pricing and dynamic, wide-reaching marketing will become critically important to maintaining momentum. Those skills have not been in demand in the last few years, due to a frenzied seller’s market. Lastly, there will be fewer homes selling. So, agents will need to be even more proactive and responsive than they have been.

Rainis: Douglas Elliman is thriving and will continue to do so in 2023 due to our “strategic growth expansion” in key luxury markets. Massachusetts is an enormous contributor with new offices on Nantucket, Wellesley, Newbury Street and downtown with the opening of the Sarkis Team office.

D’Amico: Cost management will be the biggest challenge for brokerages.

What can agents do to succeed in 2023?

Lamacchia:Agents need to work even harder. They need to be in touch with more people, they need to get very good at educating buyers and sellers on what is truly going on because when buyers and sellers don’t feel comfortable, they freeze, and that is where we are at right now in the late Fall of 2022.

Barry: They will need three things: First, they need to develop a strong business plan that includes skill-acquisition, connecting with colleagues as well as competitors, attending industry events and contributing to their community. Next, they will need to look back at the last market change to be ready for what we are likely to see, including alternatives to the more common financing solutions. Last, they will need to expand their relationships with strategic partners in related businesses to be prepared to solve their clients’ challenges. It’s all about providing the most accurate information so clients can make the best decisions.

Raveis: It is imperative that agents focus on business planning and lead development. They need to show up every day and be ready to prospect and invest more in personal promotion. Many agents have become used to business coming to them more easily in recent years. Now, it is back-to-basics where hard work and consistency will be the key to excelling in this market.

Bennett: Agents need to focus on continuing to be a trusted advisor to their clients and know the ins and outs of the market. It’s critical to use current, relevant data to advise sellers how to price homes in this new market. In addition, agents need to have an understanding of all types of financing available to buyers to provide creative ways to navigate through the rising interest rate environment.

Decker: Take advantage of the slower pace of the current market to put systems in place that will last for the long haul. The agent activities that have worked well in the past will continue to work well. Agents act as advisors on what is, for most people, the largest investment they’ll ever make. It’s more important than ever they deliver timely and relevant information to clients and prospects, and help to educate them on what is happening in the market in real time and how it affects them long term.

Warren: Agents need to make sure they are communicating with their sphere of influence and positioning themselves as a knowledge broker. They should be discussing the actual market data and educating them about their options, especially when it comes to mortgage products available to them.

Rainis: Stay positive and network, network, network. “Agents, clients, lenders, family and friends” — take the time to reach out and reconnect.

Is the work-from-home trend still changing the way people are shopping for homes?

D’Amico: I believe work from home is still here to stay through 2023. It has become a new effective way for companies to hire talented workforce without territory restriction and relocation costs.

Warren: Yes, it is. The ability for someone to work remotely, either full- or part-time, has expanded the geographic areas that some buyers are willing to look. Commute time/distance is no longer as much of a factor for those who can work remotely, so we see towns further away from major cities get more attention than they used to. This trend will only get stronger as rates rise and monthly payments get more expensive, causing people to consider traditionally less expensive towns further out.

Barry: Yes, buyers are continuing to look for homes that can support multiple home offices, though we are already seeing people return to the office 2-3 days per week. This is evidenced by the traffic in and out of Boston and Cambridge having returned to pre-pandemic commute times.

Decker: Absolutely. While a lot of employers have brought their staff back into the office full-time, many are still using remote and hybrid options, which is giving a lot of buyers more flexibility in terms of where they can live.

Lamacchia: No, I wouldn’t say it’s changing much of anything as far as searching for homes goes.

Raveis: Not really. The internet has long been a convenient way to browse homes. People still search the internet whether at home or at work. Buyers still contact their agents when they are ready to see properties and place offers. Virtual tours and pictures have been available online for many years, but all the latest innovations in technology will not replace a buyer wanting to physically see a home when contemplating one of the biggest financial decisions of their lives.

What does the landscape of your company look like post-COVID? (Are agents back in the office? Do you have more tech? etc.)

Decker:Real estate is a mobile-first profession. The Compass platform was designed to allow agents to run their business from anywhere, so we still have a lot of folks who will never be tethered to a physical office. On the flip side, For many agents, the “Back to the Office” movement is in full force. It really depends on how each individual prefers to run their business. At Compass, it’s our job to arm our agents with the tools and technology they need to succeed in any environment. We are blessed with some amazing agents and they are realizing now more than ever that they are stronger together. Transactions happen when agents spend time together. The office is becoming that place where agents meet and deals happen.

Barry: We are seeing a blend of the work-from-home and in-office work habits from our agents. Consumer needs to either buy or sell are consistent throughout all markets, so in an effort to help our agents keep their focus on achieving their clients’ objectives, the tech stack we offer is more robust than ever, and we have several additional features that we will be making available to our agents in the coming months. Skills training and market data scrutiny are even more important to us now. Having seen numerous market shifts over our decades-long tenure, we have had an initiative underway for months to prepare our agents for the market shift and allow them to thrive in a more challenging market.

Lamacchia: Yes, we are definitely seeing an increase of folks coming back into the offices.

Bennett: ZOOM has become a four-letter word. People want face to face interaction and collaboration, while being fully functional from home. This new hybrid environment allows them to do so while keeping these meetings purposeful and value packed. We think this hybrid trend is our new normal.

Warren: We are indeed still seeing many of our agents work primarily from home. However, some enjoy coming into the office to meet with clients or get some work done. Since we don’t see each other in person as often as we used to, we are making it a priority to have regularly scheduled events such as company parties, group volunteering opportunities, agent luncheons, etc., to make sure we continue to maintain and build the office culture that is so important to our entire brokerage.

Rainis: Wellesley and Newbury Street will definitely be our “hubs” of agent activity, and the Nantucket office is being utilized not only by our local team but also our nationwide colleagues visiting the island. Douglas Elliman agents truly enjoy being around each other. 

Raveis: Our agents appreciate engaging with their community back in the office. When interacting in person with their peers, the amount of information agents learn about the market, trends or techniques is unrivaled. Companies that create that collaborative environment for agents build a more solid culture and thriving business in the long run.

Do you expect the Boston-area to make a full shift from a sellers market to either a balanced market or buyers market in 2023?

Decker: I think prices and unit sales will slow, bringing us into a more balanced market. Balance is key, because most sellers turn around and become buyers themselves. But as long as inventory remains limited, the market is likely to remain tilted in favor of sellers.

After years of extremely limited housing inventory, what is the inventory outlook in the Greater Boston region in 2023?

Decker: In many towns and price segments, inventory is higher than it has been in recent years. But while there are pockets of growing inventory, I still don’t see the area as a whole having enough inventory to fully meet overall demand. This will help keep upward pressure on prices, and competition may still be fierce in some areas. This means buyers still need to be prepared to move quickly when the right home, at the right price, in the right place does make itself available