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Housing industry bracing for a challenging 2023

With only few weeks until 2023 arrives, housing industry executives are adjusting their operations to face what is expected to be another challenging year. 

The Federal Reserve will continue its fight to tame inflation — with its seventh consecutive interest rate hike — despite looming concerns of a prolonged recession.

The U.S. GDP is projected to decline 1.3% in 2023 with an inflation under 3% on a year-over-year basis by year-end and federal funds rate of 3.50%-3.75%, after a 4.50% peak in early 2023, according to a Wells Fargo Investment Institute report published Friday. 

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What does it mean for mortgage companies?

“Profitability is likely to remain very constrained well into 2023, until excess origination capacity in the industry declines materially,” Moody’s analysts said in a recent report on nonbank mortgage finance companies. 

With still-high interest rates depressing both refinance and purchase originations due to challenged housing affordability and increased economic uncertainty, origination volumes will likely continue to decline moderately in 2023, Moody’s explained. 

Against the backdrop of this challenging economic and housing environment, companies in the housing industry continued to restructure and cut workforce to better position themselves.

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My thoughts as a Boston condo broker

I’m afraid with all this negative media attention on the real estate market I’ll be doing more Boston real estate blogging than showing Boston condos for sale.

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