Survey Says
By Matthew Roberts, Certified General Real Estate Appraiser
While searching for market sentiment data, I discovered the 2023 Real Estate Market Sentiment Survey by Seyfarth Shaw LLP. Seyfarth is a legal firm specializing in commercial real estate advisory and litigation, and they produce an annual survey of market sentiment of real estate professionals.
Greatest Concerns for 2023
Respondents to the survey identified their greatest concerns for 2023 in the following order:
Rising Interest Rates of Greatest Concern
The current prime lending rate is at the highest level since 2007, and the speed at which interest rates were raised was the fastest since 1981. Rising rates reduce the affordability of investment property and increase the costs of business operation. Increased interest rates and the resulting economic slowdown will likely define 2023. Asset value will likely experience weaker growth compared to previous years. Higher financing costs and uncertainty have reduced the volume of real estate transactions.
2023 Market Sentiment Survey
Greatest Concerns
Ranked by real estate professionals in Seyfarth Shaw’s survey.
- 1
Rising Interest Rates
- 2
Inflation and Rising Costs
- 3
Economic Recession
- 4
Scarcity of Debt Financing
Farm · Commercial · Home appraisals | Missouri · Illinois · Iowa
Recession Risk
According to the survey, 88% of real estate professionals believe that the US is already in or will experience a recession in 2023. Commercial real estate will no doubt be affected by factors such as financing costs, expected rising unemployment, and higher construction costs. These concerns are at the forefront of market participants’ minds.
49% believe that the recession will last 6-12 months. It should be noted that this would be shorter than the Great Recession of 2007-2009 which is reported to have lasted about 18 months.
Recession Risk
88% Expected a Recession
Real estate professionals who believed the US was in, or would enter, a recession in 2023.
How long? 49% expected 6–12 months
Expected
(49% of respondents)
Great Recession
2007–2009
0
6
12
18
Months
Farm · Commercial · Home appraisals | Missouri · Illinois · Iowa
Optimism Remains
Despite economic uncertainty, 69% view 2023 as a year of opportunity vs 31% viewing it as a year of retrenchment. Buyers likely foresee opportunities to invest in distressed assets. Although, this sentiment is down from last year when 84% of commercial real estate professionals believed 2022 would be a year of opportunity.
Optimism Remains
A Year of Opportunity?
Share of real estate professionals viewing the year as a year of opportunity.
2023
2022
Buyers likely foresee opportunities to invest in distressed assets.
Farm · Commercial · Home appraisals | Missouri · Illinois · Iowa
Increasing Your Value
Perhaps more so now than any time in the last 15 years it is important to base investment choices on accurate valuations. Opportunity will do no good without being partnered with correct action. Whether buying, selling, or financing, use Spurgeon Appraisals to help you make the best real estate decisions. Email us today for a quote.
