The Housing Market in 2023: What to Expect

 

Inflation and fast-rising mortgage rates have emerged as the two major factors that shaped the housing market in 2022.

Mortgage rates more than doubled this year, which has never happened in a calendar year, as the Federal Reserve (the Fed) took action to try and curb inflation. This finally had a cascading effect on buyer activity, supply and demand, and property prices. Some buyers and sellers chose to postpone their plans and wait until the market seemed a little more predictable as a result of all those changes.

How does that affect the upcoming year, though? Everyone truly wants the market to be more stable in 2023. We will need to see the Fed continue to keep inflation low in order for that to occur. Here is what industry experts predict for the housing market in 2023.

How Will Mortgage Rates Change in 2023?

Experts concur that inflation will continue to be the main focus moving forward. Mortgage rates rise along with inflation when it is high. On the other hand, mortgage rates will probably increase if inflation keeps decreasing. We're not out of the woods yet, despite perhaps early hints that inflation is slowing as this year comes to a close. Inflation will still be a concern in 2023.

All of this is currently taken into account by experts when predicting mortgage rates for the upcoming year. And if we average their predictions, analysts suggest we can anticipate more rate stabilization in 2023. It's difficult for analysts to predict with certainty where they'll settle, whether that's between 5.5% and 6.5%. That means, we’ll start the year out about where we are right now. But we could see rates tick down if inflation continues to drop.

In the meantime, expect some volatility as rates will likely fluctuate in the weeks ahead. If we see inflation come back under control, that would be good news for the housing market.

How Will Home Prices Change Next Year?

Supply and demand will always determine home values. Home prices will rise in direct proportion to the number of purchasers and the number of available properties. And precisely that is what we observed throughout the pandemic.

But this year, things were different. As buyer demand decreased as a result of rising mortgage rates, housing supply increased and property prices began to moderate. The degree of moderation has varied by locality, with the hottest markets experiencing the biggest changes. The truth is probably somewhere in the middle. That means nationally, we’ll likely see relatively flat or neutral appreciation in 2023.

Mortgage rates, which will be based on inflation, will be what characterize the housing market in 2023. Utilizing a reliable real estate advisor is the greatest method to stay current on predictions made by industry professionals for the upcoming year.

To start the process of buying your new home right away, Vanna Siackhasone at (907) 720-4663.