From tight competition to aggressive rate hikes, 2022 was a very unique year for the housing market. With house sales steadily declining into the beginning of 2023, many people are wondering if 2023 will be the year to buy a home or perhaps keep renting.
Many sites online say that the housing market could have a bigger downfall than 2008, but this just seems really worst-case scenario, and likely just to garner them more clicks. All of the research I have done suggests that the most likely route for our market is gradually upwards once again. In this post, I will lay out some of the information that supports that.
Where 2022 Left Us
In the beginning of last year, our strong economy and record-low interest rates dumped fuel on housing market fire, and the result was huge demand and not much inventory, so prices skyrocketed.
Fast forward a few months, and our economy is not in as strong of shape as before. The Feds rush to increase interest rates to gain control of soaring inflation rates. Rates went from 2-3% up to 6-7%, which made buying a home too expensive for many buyers, and the ones who still could certainly couldn’t afford as much as they could have 3+ months prior.
Many buyers decided to pause their search, and sellers started to quickly notice that selling wasn’t as easy as throwing a sign in the yard, like they thought it had been a few months ago. Now, days on market were creeping up, price negotiations becoming more common, and buyers are starting to get lower priced offers accepted and more repairs done to the house from the seller.
Prices started climbing slower and slower and eventually became stagnant for the most part. Low inventory kept prices from collapsing, but many markets have started to notice a little drop in prices. Some buyers are still searching, but many are waiting on rates to drop, and many sellers are waiting on rates to drop as well so they can have a nice rate when they are ready to buy back in, and so they can get top dollar from their property. So except for those who really need to buy or sell, everyone else is in a bit of a stand-still.
Where 2023 Will Take Us
With 2022 ending with high rates that make it tough to afford a house, the positive news is that rates have been trending down (30-Yr FRM averages went from 7.08% to 6.42% today) and they are expected to continue to trend downwards as the Federal Reserve succeeds at getting inflation under control.
We shouldn’t expect rates to get back down to the 3% range we were blessed with at the beginning of last year, but these rates should be enough to get our market back on track. Greg McBride, chief financial analyst at Bankrate, expects rates to drop to 5.25% for a 30-year mortgage by the end of this year.
A slight drop in interest rates combined with the already low inventory has experts expecting home prices to appreciate in 2023. REALTOR.com expects there to be a .3% decrease in sales in 2023, but an increase in home values by 5.5%, and they expect rent rates to go up too.
Will 2023 Be A Buyers Or Sellers Market?
Experts are expecting 2023 to be the first year in a while that the market is not a sellers market, but they are not expecting it to be a buyers market either. Instead, they believe that buyers and sellers will be on a similar playing field. Low inventory will keep prices up for sellers, but there still won’t be as much demand from the buyers side as there has been in years passed.
How To Have The Best Real Estate Experience Possible In 2023
Whether you are buying, selling, investing, or looking for a place to rent, there are always going to be real estate experts eager to help you. Buyers should work with agents who can help them negotiate for the best terms possible this year, and sellers should work with a diligent agent who can get their home in front of the right audience and get it sold for top dollar.
Another great way to stay on top of the market is to constantly be in the loop about what is going on- such as inventory levels, interest rates, and trends. If you would like to subscribe to my weekly newsletter where I send out key market information, especially regarding Catawba and the surrounding counties, click here.
Thanks for reading! Let’s make 2023 a fantastic year!