Our 2023 Market Predictions
With 2023 rapidly approaching, it’s time we talk about what the new year may hold for potential homebuyers. If you were interested in buying this past year but were priced out of the market, a new year may bring new opportunities to seal the deal, especially if you’re willing to get creative. Let’s jump into our housing predictions for 2023.
Interest rates will continue to rise.
For the seventh time this year, the Federal Reserve raised interest rates in an attempt to slow inflation. While the central bank’s decisions don’t affect mortgages as directly as other products, they do set an overall tone for mortgage rates.
“Mortgage lenders and investors closely watch the central bank, and the mortgage market’s attempts to interpret the Fed’s actions affect how much you pay for your home loan,” Bankrate reports. “Such increases diminish purchase affordability, making it even harder for lower-income and first-time buyers to purchase a home.”
The good news is, while mortgage rates definitely affect home sales (hello, all of 2020 and 2021), life events tend to outweigh the price. Housing economists point to the 1980s, where mortgage rates were as high as 18%, yet Americans still bought homes. And again to the 1990s, where 8-9% rates were totally normal, but the market refused to crash.
The interesting place we’re in now is there is still a low inventory of homes. While we may be seeing a cool-down, especially in the “off months,” that will give homebuyers a chance to breathe unlike the previous years, it’s predicted there will still be severe competition for those looking to buy.
Homebuyers will have to get financially creative.
For years, a traditional 30-year fixed mortgage has been the talk of the town, but this new housing scope brings a greater need for financing options. Especially for millennials and Gen Z looking to buy their first home. As we enter 2023, consider working with a loan officer that can fully dive into your options with you and find you the best deal. Getting an Adjustable-Rate Mortgage (ARM) may work better for your needs if you’re buying short-term. Looking into a mortgage buydown may help you cut interest costs. There are even available loans for non-citizens without a social security number (called ITIN loans) that can be layered on top of other homebuying grants. In 2023, we’re predicting mortgage services that can provide homebuyers the full picture are going to win out.
The buyers will take back the power.
Experts are predicting this new year will bring a gradual shift of power back to buyers. U.S. News and World Report predicts existing home prices will have to fall between 5-10% nationally and existing home sales will slow. As interest rates remain high, those who are locked into well below 4% are going to keep their homes as investments rather than accept a lower sales price. And while experts are expecting to see a brief reprieve in price hikes for renters, they warn it may not last by mid-2023. So if you’re feeling outpriced from the renting world, this may be a great time to buy.
Overall, 2023 is on its way and there’s no definite way to predict what it’ll bring. The only definite thing homebuyers and sellers can control is the team they hire to help them. To navigate these fast-paced housing changes, be sure you have a team that does the most, but also makes real estate easier. If this is the year you want to buy or sell, contact Team Elite Realtors today.