As 2023 progresses, many people are wondering where the real estate market is heading this year. The days of historically low interest rates and bidding wars are certainly over, but that doesn’t necessarily mean we’re in a buyer’s market. Here are some housing market predictions from top experts and economists in the real estate industry:
Mortgage Rates May Drop
As a result of inflation, interest rates nearly doubled in 2022, leaving those who were planning on buying a home in a state of panic. Although there are mixed opinions from economists, there is hope that interest rates will come down as the Federal Reserve gains control of inflation. Greg McBride, the Chief Financial Analyst at Bankrate, predicts that the 30-year mortgage rates will decrease to 5.25 percent by the end of 2023.
Home Prices Will Depend on Your Market
One thing is for sure in 2023: Market conditions will vary widely depending on location. Whether or not your home prices will rise or fall will be determined by where you live. For example, the chances of home price appreciation are greater if you live somewhere considered highly desirable.
Inventory Won’t Increase Significantly
Although we did see an increase in inventory by the end of 2022, don’t expect the housing supply to rise substantially in 2023. Uncertainty and an economic downturn are predicted to prevent many homeowners from selling this year. Also, homeowners who have low-interest mortgages on their current homes are concerned about moving and losing that rate.
Expect a More Balanced Market
Even if inventory does continue to grow, it won’t grow enough to constitute a buyer’s market. To transition into a buyer’s market, there would need to be more than six months worth of inventory, which is unlikely to happen in 2023.
It Will Take More Preparation to Sell a Home
At the beginning of last year, homeowners didn’t have to do much to prepare to list their home and still sell quickly. For a fast and profitable sale in our current market, we recommend preparing the home by making small upgrades, decluttering, and staging. Even with preparation, homeowners should prepare for their home sale to take longer.
There Will Not Be a Market Crash
For those of you wondering if the rapid mortgage rate increases caused a housing bubble, it did not. Our current housing market conditions are still very different from the conditions that were seen in 2007. Although foreclosure rates have increased, they’re nothing like what we saw before the crash of 2008. Also, many homeowners are sitting on an impressive amount of equity, which provides security.
It’s always beneficial to stay up to date on the housing market conditions. However, timing the real estate market for a home purchase or sale can be incredibly difficult. If you have questions or are wondering if now’s the right time for you to buy or sell a home, give us a call at 562.896.2456 or fill out the contact form below.