With a new year comes new predictions about how the housing market is going to go. Trends go up and down, and it pays to know which direction it’s heading in so that you can plan ahead for the future. What are the experts saying about the housing market in 2023?
Mortgage Rates Are Still Climbing
Before you start looking at new homes in Groveland, you should look at the current mortgage and interest rates. Both roughly doubled in 2022, and though there’s the hope that they will go down this year, that doesn’t seem to be the case. Inflation and interest rates will continue to climb, leading to another potential recession and geopolitical tensions that will make mortgages continue to increase even more.
Some experts have said, however, that by the end of the year, the interest rates will have peaked and will start to go back down again so it might be worth holding out until then.
Housing Sales Will Decline
Because of the elevated interest rates, it’s unlikely that homes will sell as quickly as they used to. They will spend a much longer time on the market, and sales rates can drop by as much as 15%. Housing sales have been slowly approaching being on the market for at least 30 days or more.
Home Prices Won’t Drop
Despite house sales rates dropping, prices won’t fall with them. They might increase by about one percentage point but will stay at relatively the same rate. This will, of course, end up hurting values and pricing, which can be great for sellers but great for home buyers who are looking to get cheaper home prices.
Houses in the more expensive markets are going to see the largest declines, especially with limited inventory. However, mortgage holders requiring stronger credit quality and the demand for young adults to become homeowners will likely help home prices from falling any lower.
It’s Unclear Whether Housing Inventory Will Increase
Some experts are divided on this. Some state that there isn’t enough inventory to go around and that it might dry up soon. And because builders are scaling back on starting new houses, there isn’t going to be a great supply.
Other experts state that the inventory will increase because the high rates will cause homes to be unaffordable so fewer people are buying.
Houses Will Not Become More Affordable
If mortgage rates and inflation starts to ease up, then buyers will feel less of a strain but not by much. Prices on homes will pretty much remain the same, which have been at least 40% higher than the prices before the pandemic.
Overall, the housing market won’t change much during 2023, remaining at tepid levels that aren’t going to entice either sellers or buyers to get involved. The hope is that supply and demand can hopefully bring down interest and mortgage rates so that the market can pick up again. Instead, the only thing that might increase would be the number of home equity loans being taken out throughout the year.