2023 Wrap up: Year-end Analysis & predictions

January 17, 2024


The 2023 real estate market was interesting to say the least. The media has reported many conflicting stories over the past couple of months concerning the state of the market. The most common theme in the market, over the past 12 months, has been that the number of transactions have decreased dramatically while the prices have stayed consistent.

The interest rate was a driving factor in the recent market activity. In the past year, rates reached as high as 8%, and most recently were at 7.2%. Experts have predicted that the Federal Reserve will be making rate cuts throughout the year, up to three or four times. When looking at the interest rates over time, it can be seen that rates have been as high as 17.02% and as low as 2.25%. Looking at the history of the rates can put the numbers today into perspective. 

Buyer demand is very high at the time. After the interest rate spikes and the build of sellers’ desire to move, the group of buyers is much higher than the number of listings coming on to the market. Due to buyer demand being so high, newly constructed homes will continue to be brought to the market. Rent is extremely expensive at the moment, so people will be looking to make an investment in their own property.

Prices aren’t expected to change in the upcoming year. The home prices are driven by supply and demand, and the real estate market is still in a supply crisis. Around 30% of listed homes are still receiving multiple offers, these are usually starter homes. 

The coming year is predicted to be slower than last by experts. The number of sales are projected to be around that of 2008, with a slight pickup in the market towards the end of the year. The rates are suspected to drop three or four times in the next year. Quarter one and two are expected to experience a slower market, and quarter three and four are expected to pick up. The predictions are made by studying the past and how similar economic situations have affected the market. 

When looking into the farm and ranch market, it is highly important to look at the production agriculture market as they are in direct correlation. Production farmland transactions are expected to decline as the interest rates remain consistently on the higher side and the grain market declines. Production ranchland transactions have stabilized into a consistent range, along with appreciation of these properties. Ranchland transactions are expected to be from the growth of existing ranches and the expansion of pasture land for current producers.

In 2023, we saw an increase in buyers looking for self-sufficient properties. Solar systems for total off-grid have improved in quality, functionality and better-built batteries, which adds value to homes for the seller and provides the buyer with the instant dependency they desire. There has also been an increase with on-grid homeowners adding solar arrays and/or wind energy and participating in ‘net-metering’, which eliminates the use of batteries. Manufacturing companies are putting in large solar farms to reduce their dependence on service providers and to meet the government's requirements for green-energy.

Montana provides information on residential alternative energy revolving loan programs at https://deq.mt.gov/energy/programs/aerlp. Small businesses and farm and ag producers can find information on grants and loans at https://www.rd.usda.gov/mt.

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