The Housing Market in 2023

It is no secret that we are in a slower real estate market heading into 2023 than we were this time last year. With higher interest rates, low inventory, and costs outside of real estate, such as inflation, making it harder for potential buyers to enter the market, the outlook might appear bleak. However, as with all things, there are some silver linings to otherwise lackluster predictions heading into the new year.

Home Sales Will Decline

In October in Seattle, for instance, there were 42% fewer listings put up than in October 2021. However, predictions point to a recovery later in the year. With mortgage rates poised to decline through next year, demand will follow the costs as the upfront costs hopefully become cheaper for potential buyers. With many sellers likely holding off earlier in the year due to lower buyer demand, the end of the year could see much more activity.

Mortgage Rate Relief

30-year fixed mortgage rates are expected to dip below 6% by the end of 2023[EI1] , down from where they are currently hovering around 6.3% after posting back-to-back monthly declines. If this trend continues, buyers could see dramatically lower rates, although they will likely still be well above the 2 to 3% rates we saw at the beginning of 2022. There are many factors to consider when predicting lower mortgage rates, but the recent declines are promising.

Home Prices Will Decline, But It’s Not 2008

Mass foreclosure is unlikely because many homeowners are locked in at mortgages with lower interest rates and a good job market, and those who bought homes recently probably made a large down payment and likely have at least some equity in their homes already. With inventory likely to decline for most of the year and stay at a historically low level, though with an uptick possible later in the year, prices will most likely decrease but not collapse. Contingent on mortgage rates, buyers might even see some increased affordability, although this is unlikely. However, with multi-family home construction at a half-century high, renters might see benefits and lower rents, potentially allowing them to upgrade to larger rental spaces or save up to purchase their own homes in the future.

We Are Here to Help!

As always, The Chang Group’s unparalleled expertise can help you navigate the complicated markets today, and in the future, whatever your real estate goals may be. Do not hesitate to reach out to our team with any questions about the current market, the upcoming market, or buying or selling your home!