Summary of CRE® Economic Sentiment Survey – January 2023
- About 40% of responding Counselors of Real Estate see a flat economy in 2023, but nearly as many (38%) are anticipating a recession.
- Despite efforts to bring down inflation, over 60% see the CPI up between 5% and 7.5% in the year ahead, and another 10% expect prices to rise more than 7.5%.
- Labor markets are expected to stay tight, but monetary tightening is forecast to push unemployment up into the 4%-5% range, according to more than half the respondents. But a third of the CREs see joblessness rising above 5% by late this year.
- Part of the reason for that is that 40% of respondents predict a net loss of jobs this year, and an additional 40% see subpar job growth, even if net change for the year is positive.
- Virtually no one thinks that the FED is finished with raising interest rates. Many feel the pace of increasing the Fed Funds rate will slow, but over 20% see the Fed target rising above 5% before peaking.
- Some 55% of respondents believe the Fed Funds rate will settle in between 4% and 5% by year-end.
- 62% of respondents recommend that real estate investors hold their positions this year, rather than systematically buying or selling in the current market. 13% recommend this is a good year to take a long vacation!
- Internationally, 75% see recession – and a potentially severe one at that – as the likely scenario for the U.K. in 2023. About the same number view recession in the EU as probable, but with somewhat lesser severity. Even China could fall into recession, according to half our respondents. A caveat, though, as about 10% of CREs responding felt they didn’t know enough about offshore economies to make a solid comment.
- Southeast Asia, Japan, and the Middle East are viewed as having higher likelihood of enjoying at least moderate growth in the coming year. But again, we see respondents selecting the “I don’t know” option 15%-20% of the time.
- Interestingly, some 64% of Counselors feel that 2023 is a favorable year for international investors to place capital into U.S. real estate markets.
- Though there was a closer difference of opinion, CREs think U.S. capital sources may have a favorable opportunity to invest abroad in 2023.
Watch Decoding the Economy: Mission Possible? presented by The Counselors of Real Estate’s Economic Advisory Council.