The real estate market for last year was most noteworthy for inflation and a steep increase in home loan rates. This all had a significant impact on buyer activity where momentum slowed leaving some buyers putting their plans on hold for their home purchase. So what does this mean as we enter 2023? Here is what some experts have to say.
Home Loan Rates
Nearly all experts agree that the future of mortgage rates hinges on inflation. If it is high, then rates will be too and if it continues to fall, rates will follow. There have been indications that inflation is cooling but it is still on the radar. What experts are stating now is that they expect rates to stabilize this year. It remains to be seen where they will land but if you average speculation from Freddie Mac, Fannie Mae, MBA and NAR you will see them arriving between mid 5% and mid 6%.
Home Price Trends
We can anticipate home prices to still be defined by the law of supply and demand. We experienced this for the past handful of years yet the landscape has changed during 2022. Buyer demand has cooled off due to the higher mortgage rates which has allowed supply to grow. Similar to mortgage rate predictions, we should examine the average of what experts forecast. Some feel we should see prices continue to rise, some feel they may fall. However, when you average what Realtor.com, HPES, NAR, Freddie Mac, MBA, Fannie Mae and Zelman have to say, you see rates steady for 2023. Each market is different where some have been more overheated than others. So in the end it makes sense that some may see drops while others will see increases this year. Lawrence Yun, Chief Economist of The National Association of Realtors puts it best by saying “After a big boom over the past two years, there will essentially be no change nationally . . . Half of the country may experience small price gains, while the other half may see slight price declines.”