Depending on when you looked at the market in 2023, you may have been looking at an entirely different picture than you were looking at a month prior. 2023 was just wholly unpredictable when it came to the housing market, and 2023 isn’t looking to be any more stable.
One of the hallmarks of the 2023 housing market was the massive amount of volatility that was present in the market as a whole. This led to a lot of the same fluctuations that we’re likely going to see continue into 2023. There are unknowns in the form of inflation and interest rates, as well as from the foreclosure industry, both of which can contribute to very difficult market forecasting. Here are the 10 biggest things to know about the 2023 housing market.
1. Supply Is Relatively Low
The number of homes on the market has dropped considerably over the recent period, with Zillow reporting only about one million homes on the open market. That’s down nearly one-fifth from the same time in 2020, and nearly 40% compared to December of 2019. Not only does this put a very high premium on the housing currently on the market, but it makes it a decidedly seller’s market going into the spring housing season.
2. Homes Will Be On The Market For Shorter Periods
The National Association of Realtors reports that in 2020 homes were only on the market for an average of just 21 days, and that rate has accelerated to only 19 days, recently expected to hasten even further. This means that not only is it a seller’s market, but for buyers in the space, there is an incredible amount of pressure and potential competition for each sale. This may lead to potential bidding wars over the right properties.
3. You May Pay Much More To Get What You Want
Some homes in 2023 are going to set the bar for getting the seller the price they want, but the homes are going to be exactly what the buyers want as well. One of the hot features on the 2023 housing market is homes that already have mental health and wellness spaces, and those who make sure they have their listing perfect will reap the rewards. For potential homebuyers that have mental health spaces on their list of needs are going to be ready to pay what they need to, to get the features they want.
4. Foreclosures Will Add Unpredictability
Due to the pandemic, a large part of the housing market for 2023 was supported by the pause of foreclosure processes around the country. When these were recently lifted, there was an incredible number of foreclosures filed, more than 100% over the same time the previous year. For some time, this will affect the supply rate, as the process of foreclosures will deplete available housing for some time.
5. Interest Rates Will Be A Wild Card
While the rates themselves and their effects on the market will be a potential wild card, it’s essentially guaranteed that the Fed will raise interest rates, according to data from Bloomberg. This raise could even make the short-term housing market even more hypercompetitive than it would be going into the spring housing hunt. Knowing that interest rates are going up could force a huge influx of buyers into an already tight space, putting pricing at a premium.
6. Prices Are Unlikely To Go Down
Freddie Mac predicts that while prices likely won’t go down, they expect them to increase at a relatively lower rate than the norm. Prices are expected to increase only about 6% over 2023, with only about a 1.5% increase each quarter.
7. Increased Lending Options Will Attract New Buyers
Even with the substantial buyer pressure on the market, there is the potential that the current variety of lending options, like conventional loans, as seen here, will draw in even more potential buyers to the already cramped space.
8. Rural Real Estate Will Be Hot
Many of the listings with the shortest times on the market are parcels away from the city. Suburban listings are very popular, and they only get more popular the further out of town you go. Rural listings are incredibly popular right now for those looking to escape cities and larger towns.
9. People Are Moving To More Affordable Housing
With inflation fears approaching a crescendo, there is a push for homebuyers to get into the cheapest homes that they can. This is because the pressure of even small mortgage payments will be difficult to meet if inflation continues to worsen. This will be at odds with the seller’s market trying to drive prices higher, but data from Realtor.com shows that in areas surveyed, it may be cheaper to buy a home than to continue renting, which may drive even more first-time homebuyers to market.
10. Bigger Homes Are Moving Easier In The Suburbs
While traditionally bigger suburban homes have more trouble selling, those homes will sell much easier in 2023. Part of it may be the exodus from the cities into suburban and rural areas, but another prime component will be the general shortage of housing supply. As a result of the shortage, those who may not have considered larger homes may find themselves closer to the top of their budget than the bottom when looking for suburban homes.
Be Aware Of What The 2023 Housing Market Has In Store For You
2023 is already shaping up to be a wild ride, so if you’re planning any potential real estate moves, make sure you’re well-informed what the market has in store for you. While you may have a notable advantage by putting your home on the market, you will face similar challenges as other buyers if you do not already have another residence lined up.