While the current inflationary state of the economy is posing new challenges for homebuyers, there are several important, positive side effects to keep in mind if you’re considering purchasing a new home in the near future.
According to realtor.com’s recent 2023 Housing Forecast, while home prices are not expected to dip much further (good news if you’re thinking about selling), there will be a benefit to buyers in most locations in terms of an increased amount of housing inventory to choose from. Here’s a look at the home-search site’s other predictions for 2023, along with the silver linings within them:
Realtor.com predicts that average mortgage rates will reach 7.4% early in 2023, but then begin to gradually retreat, with an expectation they’ll level off at 7.1% by year-end.
Silver lining: Interest rates shouldn’t continue their upward trajectory as inflation begins to level off. And despite the increases, they will remain historically low.
Home-sale prices aren’t expected to come down, however, realtor.com predicts that price growth will moderate to a single-digit yearly pace (+5.4%) for the first time since 2020.
Silver lining: While prices may not plunge enough to create bargain conditions for buyers, they have leveled off from the unrealistic highs at the peak of the pandemic, as have bidding wars and risky buyer concessions, such as skipping critical home inspections. The flip side is a silver lining for sellers, who won’t have to reduce their list price to unrealistic lows.
According to the report, rents (+6.3% year-over-year) will outpace home prices and likely hit new highs, further adding to budget pressures—especially for first-time buyers.
Silver lining: Rising rents means homeownership could present a more affordable option for first-time homebuyers, many of whom may see government relief from student loan debt.
Realtor.com and most housing economists see an increase in existing homes for sale (+22.8% year-over-year), as the inventory refresh that began last summer accelerates.
Silver lining: This is all upside for prospective homebuyers who will have more homes to choose from, and more time to make their decision.
The report also predicts that home sales will decline 14.1% year-over-year to 4.53 million in 2023, the lowest level since 2012.
Silver lining: Less competition for homebuyers.
While staying informed on national housing market trends is essential for homebuyers and sellers alike, remember that the old adage remains true in any market: All real estate is local. Consult with a local real estate professional to find out how national trends are impacting your market. A trusted agent will be able to guide you through the challenges to help you achieve your real estate goals.