The housing market is highly competitive with a lot of factors to keep in mind. When purchasing a property your considerations will likely include factors such as the location of the home, local amenities, school districts, access to interests and other means of transportation, local retail locations, and more. In addition, there are finical aspects such as the cost of the property, the amount of your down payment, closing costs, and interest rates.
Interest rates in particular have become a widely discussed topic. Increasing interest rates (which are tied to inflation) have affected many industries and consumer products. Questions on increased interest rates 2023 can be a deciding factor in whether you purchase a home and if so what you are looking to spend.
The 2023 Housing Market Points To Know
Buyers are Cautious But Willing To Buy:
When interest rates increase, buyers become more cautious. While there remains a healthy amount of new and first-time home buyers the higher interest rates have made them more selective and more likely to wait things out. Some would-be buyers are afraid they will buy before rates start to decrease and others prefer to wait for that to happen before making a purchase. Some buyers will grow impatient and realize rates are not decreasing to choose to act. This can create situations where supplies go down due to several buyers entering the market at the same time. Simply, some buyers are not willing to wait another year to buy a home and are willing to take a risk in a less-than-ideal environment. Plus, some buyers do benefit from the current environment due to less competition and a greater ability to negotiate. While higher interest is a trade-off there are advantages to being willing to buy a home now.
The need to fight inflation has led to the government increasing interest rates which have impacted many aspects of the broader market. Predictions point to interest rates continuing to increase. How much interest rates increase and when they start to come down is hard to predict. Some have predicted only minor increases in the increasing interest rates while others predict interest rates for homes growing as high as 9 percent. There is good news though. The housing market has started to level off and homes are no longer selling at amounts far above their appraised value. In addition, if interest rates climb, this will create a somewhat flat market where supply and demand both decrease. There is also a good chance that even if a home is purchased with a high-interest rate the chance to refinance in the future when rates come down is relatively high.
What The Future Holds:
Predicting the future of any market is no sure thing. However, given current trends, many industry experts predict that 2023 will be a busy year at certain points The spring market looks like it will be busier than Fall as it relates to home purchases. While some markets may see prices stabilizing or even falling, many of the busier markets will remain hot. A key factor that industry experts are paying attention to is federal interest rates. Once rates begin to fall the market will see an increase in purchases as many buyers are waiting for this moment. Depending on government activity, this could be in late 2023 to 2024 as interest rates start to come back down. However, this does depend on outside factors such as inflation.
The current housing system is facing a bit of uncertainty. But even in an environment where interest rates are high, there are still deals to be found and the decrease in interest rates in the future allows further opportunities such as buying or refinancing.