As we are almost closing 2023, what are some commonly asked questions about the real estate market?
Home prices in numerous real estate markets reached all-time highs over the previous three years. There are significant uncertainties surrounding the nation’s housing markets in 2023 as interest rates increase further. Many buyers and sellers are unsure if these high prices will remain stable or rise further.
Why are home prices so high compared to two years ago?
Low supply and high demand are the quick answers. The national average of housing prices increased by 15% in 2021 and by 9% in 2020, respectively, according to the Federal Housing Finance Agency’s (FHFA) Home Price Index. Prices up until that point had only increased by around 5% year historically.The Federal Reserve lowered mortgage rates and borrowing costs to all-time lows to promote economic activity because of the historically strong demand. The idea was to make expensive home mortgage payments more tolerable on a monthly basis. But while many people waited out the Covid-19 outbreak and its impact on the market, there were fewer homes for sale during that time.
That’s great, but how about 2023?
Sales of both new and existing homes have significantly decreased as a result of rising mortgage rates. Existing house sales were down over 20% year over year, according to the National Association of Realtors. The median sale price of homes increased 7.7% at the same time.The quantity of properties for sale continues to be at historic lows, despite the fact that demand may have slowed in most major areas. According to experts, the national average home price growth may continue, although at a significantly slower rate than in the previous two years. The Mortgage Bankers Association (MBA) and Fannie Mae forecast 3.1% and 3.2% growth in existing home prices for 2023, respectively.
In conclusion, there may be less competition for prospective purchasers, but property values are likely to stay high.
Will the housing market crash in 2023?
Compared to 2007–2008, experts claim that the current market conditions do not constitute a “housing bubble.” Too many mortgage companies approved buyers in the years prior to the collapse of that bubble who lacked the means to make their monthly payments. The buyers did not even have equity in the property back then because many home loans were arranged with no down payment on the residence.
The eventual sharp decrease in housing values made it simpler for the new owner to walk away from the property, which led to the crash. However, mortgage qualifying nowadays have considerably better credit histories and equity in their homes. The New York Federal Reserve reports that, as opposed to the low credit scores of the Housing Bubble era, the majority of house loans made during the last two years have gone to borrowers with high credit scores of 760+.
A surplus of homes were available for buy in the housing market in 2007 prior to the COVID-19 outbreak, but new home development lagged behind population growth. It’s hard to predict whether the housing market is going up or down definitely, but we can help you navigate the real estate market. Buying and selling a home takes a lot of grit and decision making, but we can make it happen!
Call me at 731.234.0049 and we’ll make your home selling/buying a step further into your future!
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