Increased interest rates have combined with inflation to throw cold water on the housing market. But are conditions beginning to change for the better? Here are some housing market predictions for 2023 based on compelling insights from industry experts.
Increasing mortgage rates have fueled affordability concerns among today’s home buyers, who have been biding their time in hopes that economic conditions will improve. As the cost of a monthly mortgage has increased, sellers have had to lower home prices to attract interest from an increasing pool of wary buyers. According to industry experts, however, the housing market may be poised for improvement.
The National Association of Realtors® recently cited a decrease in 30-year mortgage interest rates, which fell from 7.08% to 6.13% over the past two months. While that number may not seem monumental, the NAR believes it could be enough to boost home buyer confidence and help dig the real estate market out of a so-called “housing recession.” What’s more, the NAR reports that home purchases have actually been on the rise as of late, increasing by 3%.
While home buying remains rather tepid, the NAR expects to see renewed buyer activity if rates and home prices continue to fall. And, while potential home buyers are always sensitive to shifts in mortgage rates, there continues to be a high underlying demand, mostly fueled by first-time home buyers.
Assessing Local Markets
Before buying or selling a home, it’s important to know that housing markets are heavily localized. To determine if your local market is thawing, watch for a few key indicators:
Recent sales: By researching recent sales, you can check to see if homes are selling above or below asking price. If the former seems to be growing more prevalent, your local market may be heating up.
Falling Prices: When buyer activity is slow, sellers commonly lower their asking prices. When researching current real estate listings, always review the price history. If asking prices are trending downward, it’s a sign the market is still relatively cold.
Local inventory: If your local market is flooded with homes for sale, it probably means that buyer interest is lacking. On the other hand, dwindling inventory can indicate that the local housing market is heating up. To get a good read on local inventory, divide the current number of houses on the market by the number of homes sold in the previous month. If the result exceeds 7, your market is probably still cold. If the number is less than 5, things may be heating up. If the results fall between these numbers, your market would be considered “neutral.”
Get Professional Help
There are numerous factors and data points that can help you determine whether now is a good time to sell or buy a home in your local real estate market. In almost every instance, it’s wise to get expert insight from a seasoned local real estate agent who can parse the metrics and help you make an informed decision.
Although national predictions can give you a general assessment of the real estate market, those trends won’t necessarily give you much insight into your city, county or state. Be sure to seek assistance from an expert, so you can time your real estate goals in a way that will best benefit your financial interests.