It’s homebuying season and here’s what’s happening in the market
Yes, the housing market is confusing right now. Questions abound. Read on for some information that may help clear up some of the confusion.
The mortgage rate roller coaster
Will rates go up or down? That seems to be the question at the top of the list for homebuyers and sellers alike.
“Rates for home loans are still caught in a tug-of-war between high inflation and the Federal Reserve’s actions to restrain inflation, which often indirectly pushes long-term mortgage rates higher,” explains Robin Rothstein at Forbes.com.
The suggestion for homebuyers is to be prepared to jump into the market when there is enough of a dip in rates for them to be able to afford a home.
Ready for some forecasts from the experts?
- Freddie Mac foresees a 6.2% rate for a 30-year mortgage by the fourth quarter of 2023.
- A bit more optimistic is Compass U.S. president, Neda Navab. “A sustained drop [in U.S. Treasury yields] could push mortgage rates into the 5% range late in the second quarter or in the second half of 2023, but that’s definitely not guaranteed.”
- “If inflation continues to slow down—and this is what we expect for 2023—mortgage rates may stabilize below 6% in 2023,” forecasts Nadia Evangelou, National Association of Realtors (NAR) senior economist.
When it comes to the current economy, with its multitude of moving parts, it’s wise to take any forecasts with a grain of salt. But do keep an eye on the economy if you hope to jump into the housing market quickly.
How’s the inventory of available homes looking?
The inventory of available homes dropped again and new listing activity is at all-time lows, according to Logan Mohtashami at HousingWire.com. Despite this, the homes that are on the market are selling quickly in many markets across the country.
These homes, by the way, are the turnkey style, in good condition with loads of curb appeal and in high demand. The fixers, the overpriced homes and those that aren’t appealing are sitting on the market.
In a nutshell? “Buyers can expect a shortage of well-priced, turnkey homes—and plenty of competition for the few that go up for sale,” according to Clare Trapasso at Realtor.com.
And home prices?
This seems to be the question that is top-of-mind for many buyers and sellers. The good news is that home prices dropped 12% “… to $363,000 in February from $413,800 last June,” says Dan Weil at TheStreet.com. Should we expect additional drops?
Mortgage rates can make or break a market. When they drop, markets turn “hot.” When they rise, activity slows way down; the inventory of available homes dries up and prices rise.
Here’s what the experts are forecasting when it comes to home prices:
- “… how much further home prices dip in 2023 will likely depend on where mortgage rates go.” (Forbes)
- “On a national basis, we expect home prices to decline about 4% both in 2023 and in 2024,” Moody’s analysts said. (The Street)
- “By February 2024, the analysts at CoreLogic expect home prices to increase year over year by 3.7%.” (Business Insider)
- The National Association of REALTORS predicts that home prices will be once again on the rise, beginning in the fourth quarter of 2023.
As you can see, the experts are as conflicted as the rest of us.
For buyers, the time to jump back into the market is when interest rates fit your comfort zone and before prices rise again.
The best thing you can do right now is get pre-approved for a mortgage, look into down payment assistance programs if you need help and keep an eye right here. We’ll keep you posted on what’s happening in the market.
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