So what are the top real estate experts in the country forecasting the housing market and what will the 2023 real estate market be like? That’s the million-dollar question these days, isn’t it?
- The Mortgage Bankers Association
- NAR, The National Association of REALTORS.
- Fannie Mae
- Zellman
- HPES, The Home Price Expectation Survey
Basically, these 5 are predicting that the 2023 real estate market in Douglas County Oregon, and across the country will enter into a flat or stagnant market. That means they don’t expect a whole lot of price increases or decreases… and not nearly as much appreciation but no negative equity is expected… flat.
In fact, if you take the prediction of each of the five of these experts and average them out, you’ll arrive at about 2% home value appreciation expected in 2023. It may not be an exact science but it gives you an indication of what the 2023 real estate market will be like.
Obviously, that is nowhere near what we’ve had over the past 7-8 years, but they’re clearly not expecting a crash or negative equity market. Yes, things can change and I will be monitoring trends and statistics weekly and monthly to keep my audience informed, but they’re not expecting a market crash or a negative market like some are saying.
That said, you might see some negative pricing in certain markets and probably more price adjustments to come, but that isn’t expected to be the norm for the 2023 real estate market… at least not at this time in most markets.
Why Buy A House In A Flat Real Estate Market?
So the question is, why would somebody buy a house in a flat market? That’s a great question, and I actually have three reasons I think are important to consider if you want to become a homeowner, you’re secure in your employment, and you can afford the monthly payment.You want to become a homeowner.
Maybe you’re on the fence about becoming buying a house. Maybe you’re just not sure if it’s the right decision for you. So take a look at these three things, digest them and see what you think, and let me know.
The Real Estate Hedge Against Inflation
First, Owning a home is a hedge against inflation. So number one, in an inflationary economy, like we’re in right now, by the way, if you haven’t noticed, prices of homes and pretty much everything else have been rising pretty rapidly across the board.
But historically, home ownership is a great hedge against those rising costs. How’s that? It’s because you’re able to lock in what’s likely the largest monthly payment you have, your mortgage payment, for the duration of your loan, although you may not like the interest rates, it locks it in, and that helps you stabilize your monthly expenses so you don’t have to worry about the next rent increase like we’ve been seeing year after year after year, which can be pretty hard to adjust for on your monthly budget.
A fixed rate mortgage allows you to maintain the biggest portion of housing expenses at the same payment. Sure, property taxes will rise and other expenses may creep up, but your monthly housing payment remains the same.
James Royal, Senior Wealth Management Reporter for Bankrate.
So let’s assume you don’t buy a house at today’s 6%, 6.5%, or 7% interest and you continue renting. What do you think’s going to happen with your rent over the next year or two or three? Do you think it’s likely to go down or do you think your rent is going to go up?
I hate to break it to you but rent is most likely going to rise just like it has been. Yes, I know it kind of stinks to think about buying a house if you feel like you’re paying too much on the interest rate, but here’s the thing…
Your monthly rent or mortgage payment is more than likely your biggest monthly nut to crack. And if you compare your mortgage payment at today’s interest rate vs. what your rent is or will be if it goes up over the next couple of years, you may not be too far off anyway.
So remember, you can always refinance your house if and when the interest rates come down, which they’re likely to do when inflation gets under control.
Inflation refuses to budge. In September, consumer prices rose by 8.2%. Rents rose by 7.2%, the highest pace in 40 years.
Lawrence Yun, Chief Economist NAR
So locking in your mortgage interest rate hedges you against future inflation. If you need more clarity or have questions, contact me here.
Mortgage Interest Rates Trends
The second thing is Interest Rates. So the second reason you might consider buying a house in a flat market is interest rates. Yeah, I know what they are currently but hang in there with me…
We could see 8.5% interest rates.
Lawrence Yun, Chief Economist NAR
Did you catch that? At a recent conference in Atlanta, Lawrence Yun actually said we could possibly see 8.5% mortgage rates, yikes! It’s crazy to see how far we’ve come since the beginning of the year.
In fact, at the beginning of this year, we didn’t think we’d see 6% mortgage interest rates, but then here we are… and then some. Here’s how I advise my home-buying clients to look at it.
I’d like you to consider it this way if rates do hit 8.5%, would you be okay with that or would you kick yourself for not locking in at 6.5% or 7%? Keep in mind, the Feds already said that they were going to raise the rates two more times before taking a pause.
The mistake I see a lot of home buyers and sellers make when deciding if it’s time to buy or sell is they measure the market or what they should do on the past market. They look backward when what they really should be doing is measuring their decision based on where they think it’s going to go.
Looking ahead, looking forward to the future. Where do we think rates are going to go? Where do we think the market is going to go? The question is, would you rather pay 6.5% Or 7% today or 8.5% later on? Or would you rather continue renting and risk future rent increases that are always hard to budget for?
My advice is if you’re securing your job and you can afford the payment, hedge yourself against future inflation. Get yourself into the market and buy now. Waiting could cost on both ends… price, and rate. Then, if/when the interest rates come down, which they likely will as soon as inflation is under control, you can always refinance.
Eventually, rates will come down, you guys. It’s not a forever thing… hopefully:)
Price Reductions And Panicking Home Sellers
And the third reason you should make the move and buy now. Price reductions and panicking home sellers. We’re starting to see some really good buys starting to hit the market and price reductions that are coming in make some of the best prices that I’ve seen over the past few years.
Keep this in mind, almost 8% of the listings on the market had a price drop, and 62% of the listings now on the market are stagnant. That means they have been on the market for longer than 30 days. You can bet that some of those sellers are starting to get motivated to make a deal.
So these things alone are making a better buying opportunity for today’s home buyers than we’ve seen in the past several years if you can see it and if you understand it (the market trends).
The Bottom Line
So what will the 2023 real estate market be like? Should I buy now or wait? That’s a big decision in any market, but understanding that all markets cycle plus the information I shared here just might help you make the right decision for you.
If you are thinking of entering the buying or selling market, or maybe you’d really like to be a homeowner, but you’re not really sure… you’re listening to the news or maybe a well-meaning friend or family member who says you just need to wait because the market’s going to crash, or whatever the story is…
I would encourage you to do your own research. Find out what the truth is and how homeownership can benefit you in any market. Then make your decision. If you have questions, shoot me a direct message. I’d be happy to help.