The housing market has weathered dramatic peaks and valleys since 2020. Understandably, both buyers and sellers of residential real estate are eager to learn what is likely to be in store for the market as 2023 dawns. After all, it’s difficult to strategize both sale and purchase options if one is unsure of whether the market is likely to rebound any time soon.
Over the course of 2022, the market shifted from a 40 percent spike in home prices – calculated over a two-year period starting in 2020 – to an abrupt slowdown in the market caused, in part, by the doubling of mortgage rates compared to what they were in January of 2022. Is the 2023 residential real estate market going to look more like the booming business of January 2022 or the slump of December 2022?
Money, money, money
Inflation is finally starting to ease a bit and mortgage rates are starting to fall accordingly. Yet, because asking prices remain high, a buying spree is unlikely in 2023. While prices are expected to drop in some markets, especially those that were particularly hot at the start of 2022, prices are likely to remain relatively steady in markets where prices weren’t artificially inflated to the degree that they were elsewhere.
It is also widely predicted that there will not be a wave of foreclosures as occurred during the Great Recession. On the whole, homeowners in today’s market have more tappable equity available to them than they did in 2008. As a result, temporary financial distress is less likely to result in a foreclosure risk for the average homeowner now than it was just over a decade ago.
On the whole, it seems that the market is predicted to begin stabilizing over the course of 2023. If successful, that stabilization could certainly lead to a more robust 12 months to follow in 2024. Keeping a close eye on financial and residential real estate industry news in the coming months will help to inform the decision-making of sellers and buyers alike.