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The US Housing Market In 2023: What To Expect

The last three years have been a whirlwind moving from a really aggressive market to a cooling market. So what does the housing market have in store for us this year? In 2023, the most important factor to watch will be what happens in the broader economy.

Lawrence Yun, chief economist at NAR thinks the 30-year mortgage rate will end 2023 at around 5.5%. Rates are not expected to fall back to 3% because the conditions that made those ultra-low rates possible in 2020 and 2021 — a pandemic and unprecedented actions by the Federal Reserve to keep the economy from collapsing — aren’t likely to repeat any time soon.

Despite higher interest rates, we saw buyers gaining power by the end of 2022 and anticipate that to continue in 2023. When rates get too low, buyers rush the market. Now there is less competition making it easier for buyers to get into a home without paying over asking price to beat out other offers. Additionally, there are new federal programs aimed at allowing more buyers to enter the market. For example, on December 10, 2022 Fannie Mae made it possible to buy a home without a credit score if you have 24 months of rental history.

If you sell this year, you will still benefit from low inventory. Supply is improving, but the number of homes on the market will remain below pre-pandemic levels. With that said, buyers have become more sensitive about condition, so it can help to address minor cosmetic repairs before you hit the market (if you can). I’ve talked to a number of buyers who feel discouraged about the condition of homes right now for the price, so a good way to stand out is to be sure your property is market ready.

One of the highlights of last year was telling our clients what their homes are now worth as a result of record high appreciation rates. We expect our 2023 sellers will also be pleasantly surprised by the equity they have in their homes. Don’t get hung up on what an online, national website says your home is worth. Call me, I am happy to calculate that for you any time at no cost. We hear many buyers say they are waiting for prices to drop to purchase, and unfortunately they will probably be waiting for a long time. While price growth is likely to slow, that doesn’t mean prices will drop. They’ll just go up by less than the current rate.

If you own property, it is important to know what is going on with the housing market. Keep in mind though that people will always need to buy or sell real estate and with a great agent, you can win in any market. Whatever your real estate goals are for 2023, we would love to help you reach them!

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