What Will the Housing Market Look Like in 2023?
Will mortgage rates drop? What about home prices? What should you do if you’re planning to buy or sell your home?
Where are mortgage rates, home prices, and home availability headed in 2023? Real Estate experts have mixed opinions about the 2023 housing market, largely because it will depend on what happens with inflation and the broader economy.
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Mortgage rates. Interest rates nearly doubled in 2022, but a slowing economy could lead to lower mortgage rates in 2023. Most housing experts are hopeful that interest rates will level off to around 5-6%, but others say the increases will likely continue through the early part of the year until inflation reduces. Most agree that rates will come down; it’s just a matter of when.
Home prices. Home prices are expected to level off as well. But unlike mortgage rates, prices vary substantially by region, as does the speed at which local markets adjust. For sellers, it’s especially important to understand that 2023 may look quite different from 2022, which makes it more important than ever to work with a Realtor who knows the local market.
Realtor.com predicts that the median home price will rise 5.4%. The National Association of Realtors forecasts a price increase of 2.5%.1
Home availability. Experts agree that the number of homes on the market will remain below pre-pandemic levels.2 But with less-frenzied demand and homes taking longer to sell, buyers shouldn’t be up against the extreme competition of the past few years.
Advice if You’re Buying
With less competition than last year, you may be in a better position to negotiate, but you’ll need to make sure you’re a solid buyer. Review your finances and make sure you’re budgeting for a home you can comfortably afford. A good credit score can help you secure a mortgage with more favorable rates.
Understand your mortgage options. Although rates remain relatively high, there are ways to reduce your mortgage payments. Be sure to obtain a mortgage preapproval so you can hit the ground running.
Find an experienced, trustworthy Realtor with experience in your local market before you start your home search. A knowledgeable agent will help you find suitable properties, compile offers, and negotiate with sellers.
Advice if You’re Selling
Existing home sales are at the slowest pace observed in 12 years.3 While you could get away with minimal home improvements and waived inspections in 2021 and 2022, today’s market may require you to tackle upgrades and repairs if you want to sell your home fast for your desired price.
Setting the right price for your house has always been important, but it’s especially crucial in the current housing market. Buyers, already strapped by high mortgage interest rates, may be skeptical about a house that’s been lingering on the market for too long. An experienced agent who knows your local market and current trends can help you set a realistic price for your home.
Whether you’re buying or selling in 2023, our Real Estate Benefits program can provide the support you need. Our expert agents will help you navigate the process all the way through closing–and you’ll receive a cash rebate!4
1 Holden Lewis, “For Home Buyers, 2022 Was Brutal. Why ’23 Could Be a Bit Better.” December 15, 2022, https://www.nerdwallet.com/article/mortgages/the-property-line-december-2022-homebuying-trends.
2 Erik J. Martin, “Housing Market Predictions for 2023,” January 3, 2023, https://www.bankrate.com/real-estate/housing-market-predictions-2023/#mortgage-rates.
3Lucia Mutikani, “U.S. Home Sales Slump to 12-year low; Glimmers of Hope Emerging,” January 20, 2023, https://www.reuters.com/markets/us/us-existing-home-sales-lowest-since-2010-price-growth-slows-2023-01-20.
4Buyer rebates are limited in Alabama, Alaska, Iowa, Kansas, Missouri, Tennessee, Oregon, Mississippi, Oklahoma, and Louisiana. If you are purchasing a home in one of these states please contact us.