What Home Buyers Should Expect in 2023
When buying a home, you need to think about more than just what you’re looking for in a property. For instance, it’s important to consider the trends in the market as a whole. Many home buyers in 2023 may be particularly concerned about cost — the past two years set records for home prices and mortgage interest rates became higher than they have been in two decades. However, instead of looking to the past, you need to know what to expect in the coming months.
1. High Mortgage Rates
Since mortgage rates are linked to inflation and inflation is likely to stay high in 2023, the chances are you can expect similar mortgage rates to last year. However, it’s difficult to say at this point if mortgage rates will stabilize or increase. The smart thing to do is secure a mortgage early in the year in case rates do rise. If you shop around, you may be able to find a decent rate. For the best rates, you need to improve your credit score, reduce your debt-to-income ratio, and make as large a down payment as possible. This means striking a balance between taking time to save more to contribute to a larger down payment and buying soon to avoid higher interest rates in the future.
2. Lower Home Prices
High interest rates last year led to fewer people being able to afford homes. The result was a fall in home prices — a trend that’s likely to continue in 2023. However, if you pair this with the potential mortgage rate increases, it still makes sense to buy early in the year, as you’ll ultimately end up paying less.
3. Slight Decline in Demand
Despite rising mortgage rates and historically-high home prices, demand has remained high over the past few years. This trend is likely to continue, although experts do expect demand to fall slightly. This is because many home buyers are in younger age groups — and these people feel the effects of high interest rates the most. They are also more susceptible to a recession, which could be on the horizon for 2023. The good news for buyers is this means they have more leverage when making offers.
4. Limited Inventory
Even with a slight drop in demand, there may be fewer homes on the market than there are buyers. Many people are waiting to put their homes on the market because they’re taking advantage of the low mortgage rates they secured before interest rates began to surge. They have less incentive to sell when conditions are better for buyers than for sellers. Another factor that has been limiting inventory is new home construction. It has been low for the last decade and is predicted to drop still further in 2023.
You need the support of professionals to help you navigate the real estate market when buying a home. You can gain expert insights by working with realtors. Sherwood Park home buyers can rely on Damon Bunting. Our team will help you find the perfect home. Contact us to get started.