What To Expect in 2023

The 2022 housing market has been a roller coaster! It has been greatly defined by two things: inflation and rising mortgage rates.  This has caused a complete market reset. 

The Federal Reserve made several moves during the year to try and lower inflation but caused the mortgage rates to more than double, which has never happened before in a calendar year. 

We saw that this had a major impact on home buyer activity, the balance of supply and demand and home prices.  As these factors changed, buyers and sellers put a hold on their real estate plans until the market felt more stable to them. 

With the shifts in the past year, what is in store for the market in 2023?  Will there be more stability? Will supply and demand balance out? For these things to happen, we will have to see the Federal Reserve bring inflation down even more and keep it there.   

Here are what the real estate experts are saying that we can expect in 2023.

Mortgage Rates in 2023 

It’s still going to be all about inflation. If inflation remains high, you can expect mortgage rates to be high as well.  But if inflation continues to fall, like it has started to, you will see the mortgage rates respond.  There are some early signs that inflation may be starting to ease up but this is something we are still going to have to watch going into 2023.

As of now, experts are factoring all of this into their mortgage rate forecasts for the coming year.  If you average the forecasts together, experts say you can expect rates to stabilize some more.  It’s hard for experts to say where exactly they’ll land but based on the average of their projections, a more predictable rate is ahead. (Keeping Current Matters)  As Greg McBride, Chief Financial Analyst at Bankrate, said: “Mortgage rates could pull back meaningfully next year if inflation pressure eases.”

Unfortunately in the meantime, we could still see the rates fluctuate in the weeks ahead.  However once inflation comes back under control, the housing market will start to bounce back!

What About Home Prices?

Home prices will continue to be defined by the supply and demand of the market.  A more buyers, fewer homes market will make the home prices rise. This is exactly what we saw during the pandemic.

But in 2022 things changed.  We saw home prices level out and the housing supply grew as buyer demand pulled back due to rising mortgage rates. But do experts think this will continue?

Some experts are saying home prices will appreciate next year and others are saying home prices will come down.  But if you take the average of all forecasts, we can get a feel for what the next year may hold.  We’ll likely see a relatively flat or neutral appreciation in 2023.  Lawrence Yun, Chief Economist at the National Association of Realtors says: “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.” (Keeping Current Matters)

The bottom line is the 2023 housing market is going to be defined by mortgage rates and those rates will be determined by what happens with inflation.  The best way to continue to stay on top of these changes is to talk to us!  We would love to help advise you throughout the real estate market and help you make decisions about the right time to sell or purchase a new home. 

417-812-5055
info@holthomesgroup.com