Wow, what an incredible year 2022 turned out to be! It’s natural to be curious about the effects of such a remarkable year on the real estate landscape in 2023, especially considering the escalating costs and the multitude of events occurring nationwide.
Can we anticipate a surge in home prices? How will the real estate market be affected?
To enhance the existing economic climate, what measures can be taken?
Here are the key real estate trends in 2023 that demand your attention, whether you’re listing your property, looking to buy, or planning to retire and relocate abroad!
Real Estate Trend #1: Slim Pickings for Home Buyers
This is the most difficult real estate trend to accept. The inventory, also known as the total number of houses not sold, was just slightly lower in November 2022 than the previous year.
This is partly because so many people are trying to buy right now. This is also due to fewer sellers listing their homes for sale. It doesn’t matter how you slice it: there weren’t as many houses to sell in the past year. This made it harder for buyers to find homes.
Don’t worry! We’ll show you what to do if you decide to enter the market.
What do slim pickings mean for buyers?
Low inventory means that you have to be vigilant when house hunting. The best homes are likely to go quickly. The average home stayed on the market for 47 days in 2021. This is 10 days less than last year. It appears that homes will continue to sell quickly in 2023.
This doesn’t give you much time to search for your dream home. Here are some tips to help you find the perfect home in this tight market.
- Sacrifice certain wants. You can sacrifice some wants if you are unable to find the house that you desire.
- Extend your search. Are you too keen on the area where you want to buy? It might surprise you at the hidden gems that can be found in less-famous areas. A local real estate agent is the best way for you to find the perfect home.
- Get preapproved as soon as possible. It is essential to get preapproved for mortgage financing before you start house hunting. It’s even more crucial when there is a low supply of homes. You could allow a buyer to take your home without you knowing it.
What do a seller’s slim pickings mean?
Low inventory can mean less competition when you are selling a house. If your home is located in a desirable area or features buyers desire, you can expect to receive offer letters.
You have a greater chance of selling your home in this market than if it is in a regular market. Your home could be the most expensive on the market and you may have an advantage in negotiations. Enjoy the possibility of receiving multiple offers and choosing the best offer. Also, you can move at your own pace.
If you are buying a home after you have sold your existing home, you won’t likely be the one driving. Before you sell, plan your next home.
Real estate trend #2: Home prices are still rising
Prices are rising in the current real estate market. This is just like grocery prices, gas prices, and pretty much everything else. By 2021, the national median home price had risen to $363,000. However, they have slowed down in the last year as they continue to increase.
Home prices rose almost 19% between April and June 2022 than they were in the same period in 2021. However, home prices rose just 14% between July and September 2021 and July through September 2021.
These real estate trends are likely to continue in 2023. Prices will likely rise more slowly than in the early 2022s, but they will still go up.
Sellers, this should bring a smile to your face! Buyers, don’t worry! We have some tips for you.
What do higher prices mean for buyers?
You must know what you can afford to purchase a house in this market. You must commit to sticking to your budget, no matter what. Don’t succumb to the pressure to purchase because you are tired of seeing other buyers take good homes off the marketplace.
It can be frustrating to wait for the right home within your budget. You’ll be happy you did it when you have financial security instead of the big, honking headache that is a mortgage.
These tips will help you feel confident when buying a house this year.
- Your monthly take-home income should not exceed 25%. This includes principal, interest, and property taxes. It also includes homeowners insurance. If your down payment is less than 20%, a private mortgage (PMI) may be required. Don’t forget about homeowners association fees (HOA).
- For a down payment, save at least 10-20%. We recommend at minimum 10% as any less will result in higher interest and fees. You can save money by putting 20% down or more. This will allow you to avoid paying PMI, which is an extra fee that protects your lender (not yourself) in the event you default on your payments. It is possible to save a large down payment. It’s possible to save a large down payment if you are patient and focused. You never know what you might find! It’s possible to save up for a five-figure downpayment by next year.
- A conventional 15-year fixed rate mortgage is the best option. A 15-year fixed rate mortgage is the best option for a home loan. Rip-offs such as the 30-year FHA, VA, and USDA mortgages, which can cost you thousands in interest and fees, will keep you in debt for many decades. We are not accepting!
Use our mortgage calculator to calculate a monthly payment that your budget can afford. Then, work with an agent who is experienced in finding houses to sell within your budget.
Our free Home Buyers Guide will help you find the right home for you in this market. This guide has all the information you need to purchase a home confidently.
What do higher prices mean for sellers?
You may soon be able to make a nice profit! This is great news, as you will need the extra cash to buy your next house. Work with an agent who is familiar with the current market to get the best deal for your house.
Be patient and wait for the right deal. You might be offered a low price by some buyers. Wait for the offer that offers you the highest profit. When negotiating, remember that the less desperate person always has a better chance.
Real Estate Trend #3: The Mortgage Interest Rates are Still Very Low but Rising
Recently, the average mortgage interest rate (the percentage charged by lenders on your loan amount) is very low.
The average rate of a 15-year fixed rate mortgage fell to 2.2% in January 2022, which is the lowest since Freddie Mac began reporting it 30 years ago. For the rest of the year, those rates ranged from 2.15% to 2.4%. They rose slightly again towards the end of 2022. Expect them to rise slightly in 2023.
According to economist geeks, the Federal Reserve will raise interest rates by around 3.5% in 2023 for 30-year fixed-rate mortgages. That’s why we recommend only 15-year mortgages. They have lower rates than 30-year fixed-rate mortgages and you’ll pay less interest because they end 15 years earlier. This is a double-edged sword when it comes down to saving money.
Churchill Mortgage is a trusted lender that will help you refinance your home or obtain a mortgage.
What higher rates mean for buyers
A higher interest rate can have several impacts on home buyers:
- Increased mortgage payments: When interest rates rise, the cost of borrowing money for a mortgage increases. As a result, home buyers will have to pay higher monthly mortgage payments, assuming all other factors remain constant. This can reduce the purchasing power of buyers, potentially making homes less affordable or limiting the size and type of homes they can afford.
- Reduced affordability: Higher interest rates can make homes less affordable for many buyers. As mortgage rates increase, the total cost of borrowing increases, which can result in higher monthly payments or a higher overall cost of the loan. This can make it more difficult for buyers to qualify for mortgages or afford the homes they desire.
- Slower housing market activity: When interest rates rise, some potential buyers may choose to delay their home purchases or opt for smaller loan amounts. This can lead to decreased demand in the housing market and slower sales activity. Sellers may need to adjust their pricing expectations or be willing to negotiate more to attract buyers.
- Affected refinancing decisions: Higher interest rates can also impact homeowners who are considering refinancing their existing mortgages. If rates have risen since their initial mortgage, refinancing may not offer the same level of savings or financial benefits. This can result in fewer homeowners refinancing, which can impact the lending industry and overall housing market activity.
It’s important to note that the impact of interest rates on home buyers can vary depending on individual financial circumstances, the overall state of the economy, and other factors. Consulting with a financial advisor or mortgage professional can provide personalized insights on how interest rate changes may specifically affect your situation.
Because of the shift in the market, Realtors across the country are now focusing on picking up home buyers as clients as opposed to listings. With the shift in how people find real estate online in 2023, many Realtors are maximizing their Google Business Profile to get new business.
What higher rates mean for sellers
Higher mortgage rates can have several implications for home sellers:
- Decreased buyer demand: Higher mortgage rates can make homes less affordable for potential buyers. As a result, some buyers may choose to delay their home purchase or opt for lower-priced properties. This can lead to decreased demand in the housing market, which may result in fewer offers and a potentially longer time on the market for sellers.
- Reduced purchasing power: When interest rates rise, the cost of borrowing increases. This can limit the amount of money buyers can qualify for and impact their purchasing power. As a result, sellers may need to adjust their pricing expectations or be open to negotiating with buyers who are working within tighter budgets.
- Pricing adjustments: In a market with higher mortgage rates, sellers may need to be mindful of their pricing strategy. It may be necessary to set competitive prices that reflect the affordability challenges buyers face due to higher borrowing costs. Overpricing a property can lead to a smaller pool of interested buyers and longer listing times.
- Potential impact on home values: If higher mortgage rates persist, it could put downward pressure on home prices. A decline in buyer demand or purchasing power can affect overall market conditions and lead to a more balanced or even buyer-favoring market. However, the extent of this impact will depend on other factors such as supply and demand dynamics in the local housing market.
- Potential for fewer offers: With higher mortgage rates, some buyers may be discouraged from making offers or be more hesitant to engage in bidding wars. This could result in fewer offers for sellers to consider, potentially impacting their negotiating position or the final sale price.
It’s important to note that the real estate market is influenced by various factors, and the impact of higher mortgage rates on sellers can vary depending on local market conditions, supply and demand dynamics, and other economic factors. Working with a knowledgeable real estate agent can help navigate these market conditions and develop a pricing and marketing strategy that aligns with current trends.
Even if you aren’t planning on moving soon, refinance your mortgage to get these low-interest rates and shorter payment terms.
What if I don’t plan on buying or selling a home this year?
You might be thinking, “All this is great but I’m not moving anywhere soon.” Here are the top real estate trends to watch now, we hear you.
1. Through 2023, equity is expected to remain stable.
Experts agree that there is little risk of a downturn in the current real estate market. However, they differ in their expectations about how much things will change. Freddie Mac predicts that home prices will rise by 5% in 2023. According to the National Association of Realtors (NAR), price growth will not exceed 6%.
You still have good news, as you will likely make a good profit if you decide to sell. If you choose to remain put, A higher net worth is a result of having more equity. To ensure that your equity (the value of your home minus the amount you owe) is increasing, continue to monitor it.
2. A real estate market crash looks unlikely.
You might be wondering whether the housing market will collapse, given all the uncertainty surrounding everything that happened in 2020. It’s impossible to predict the outcome, but economists believe that a housing crash will be unlikely.
Despite the low mortgage rates, buyers are more inclined to buy homes, which in turn drives up demand. There is still very little inventory of homes for sale. This makes home buying more affordable and allows for home price growth.
3. No matter where you live, buyers are interested.
Some buyers might be less selective because of the rapid rise in home prices over the last few years. Some buyers may be more open to considering neighborhoods that aren’t easily accessible from major cities or have limited access to the highways.
You might be wrong if you believe you live in an undesirable neighborhood or that your home is not what buyers want. This is the perfect time to sell your house.
A top-notch agent can help you take control of real estate trends
Partnering with a professional agent can help you take advantage of current trends in real estate, whether you are selling, buying, or moving out of the country!