Experts are starting to make their 2023 home price forecasts. As they do, most agree homes will continue to gain value, just at a slower pace. Over the past couple of years, home prices have risen at an unsustainable rate, leaving many to wonder how long it would last. If you’re asking yourself: what’s ahead for the price of my home, know that experts are now answering this question, and its welcome news for homeowners who may have been led by the media to believe their home would lose value.
Historically, home prices have appreciated at a rate near 4%. For 2023, the average of six major forecasters noted below is 2.5%. While one, Zelman & Associates, is calling for depreciation, the other five are calling for appreciation. The graph below outlines each expert forecast to show where they project home prices are going in the coming year.
To understand why experts are calling for appreciation next year, look to the economics of supply and demand. Dave Ramsey, Financial Expert, says this:
“The root issue of what drives house prices almost always is supply and demand . . .”
Two things are driving home prices upward. First, the undersupply of homes on the market is an issue we continue to face in this country. We still don’t have enough homes on the market for the number of people that want to buy them. To further that point, we’re still in a sellers’ market nationally, and in that scenario, home prices tend to appreciate.
Second, millennials are moving through their peak homebuying years. Since they’re the largest demographic behind the baby boomers, demand isn’t going away any time soon.
Experts are calling for home prices to appreciate next year, although at a slower pace than the previous three years. The reason for this is simple. The dynamics of supply and demand are playing out in real estate and will continue for many years to come.
It’s clear the 2022 housing market has been defined by rising mortgage rates. With rates on the rise, it’s also become more costly to purchase a home. According to the National Association of Realtors (NAR):
“Compared to one year ago, the monthly mortgage payment rose to $1,944 from $1,265, an increase of 53.7%.”
If you’re thinking of buying a home or have been trying to recently, that’s a big increase in a monthly mortgage payment – and it may be causing you to press pause on your plans. This jump is making homes less affordable, especially compared to the last two years when mortgage rates were at historic lows.
The good news is you can navigate today’s housing market and this rising rate environment with a few simple tips. Here are three things you may want to consider to help make your homeownership goals a reality.
If you’ve been looking for a home in the city center or a specific area that’s starting to feel out of your price range, you may want to try looking a little further out in a location that could be more affordable. Expanding your search location or re-prioritizing the items on your wish list can open up opportunities you haven’t considered, and that could help you afford more of what you need (and want) in a home. As CNET notes:
“Area growth is likely to keep pace with the market, which means that the outskirts of town might be hopping within five years. Consider stepping out of your ideal location by searching in the nearby cities. You may find better prices and more square footage.”
Working with a trusted lender to learn about the different loan types and options is essential too. According to Nerd Wallet:
“A variety of mortgages are available with varying down payment and eligibility requirements.”
Experts know how to point you in the right direction when it comes to exploring ways to find the best home loan for your situation. With rising mortgage rates making it more costly to finance a home today, there may be an ideal option out there your loan officer can introduce you to. This could make a home purchase more affordable and within your financial reach over the life of your loan.
There are also many options available when it comes to securing the funding you need to purchase a home. One valuable resource to explore is downpaymentresource.com. Searching for specific down payment assistance options available in your local community could be a game changer when it comes to taking your first step toward homeownership. As NAR indicates:
“Many local governments and non-profit organizations offer down-payment assistance grants and loans, targeted to area borrowers and often with specific borrower requirements.”
Plus, there are programs and special benefits for individuals working in certain professions or with unique statuses, including teachers, doctors and nurses, and veterans.
Ultimately, that means there are many federal, state, and local programs available for you to explore. The best way to do that is to connect with a local real estate professional and your lender to learn more about what’s available in your area.
If you’ve been searching for a home and have found yourself stepping out of the process because you’re worried about rising costs, let’s connect. Having a team of local advisors on your side may be just what you need to guide your search in a new and more affordable direction.
One of the top stories in recent real estate headlines was the intensity and frequency of bidding wars. With so many buyers looking to purchase a home and so few of them available for sale, fiercely competitive bidding wars became the norm during the pandemic – and it drove home prices up. If you tried to buy a house over the past two years, you probably experienced this firsthand and may have been outbid on several homes along the way.
But here’s the news you’ve been waiting for: data shows clear signs bidding wars are easing this year.
According to the National Association of Realtors (NAR), the average number of offers on recently sold homes has declined considerably over the past few months (see graph below):
The graph shows homes were seeing a high of around five offers earlier this year. But the latest data shows that average was down to just shy of three offers per recently sold home. This shift is happening largely because rising mortgage rates moderated buyer demand and slowed home sales, resulting in a growing supply of homes on the market. Essentially, more choices for buyers.
If you put your home search on pause because you were outbid last year or because you didn’t want to deal with the peak intensity of bidding wars, you can breathe a welcome sigh of relief. While it’s still a sellers’ market, an uptick in inventory gives you a window of opportunity to jump back in. You may still be competing with some buyers, but it likely won’t be anything like it was just a few short months ago.
If you put your plans on pause because of intense bidding wars in recent years, it may be time to kick off your home search. Today, bidding wars are easing and that may mean less competition for you as a buyer. If you’re serious about buying a home or making a move, let’s connect to get started today.
People who have been homeowners for a long time tend to forget how exciting and nerve-wracking it feels to buy a home for the first time. Once you’ve been through the process, you know what to expect and aren’t surprised by the second (or fifth) go-around. But for new homeowners, the road is filled with novel experiences, and the learning curve might feel a bit steep to someone who has never been through it before.
So, let’s take a look at nine things that may surprise you as a first-time buyer, to help cut down on that learning curve!
While there are no barriers to looking at houses online, it’s absolutely critical to get pre-approved for financing before going to look at homes in person. This will allow you to not only determine exactly what you can afford, but it will also ensure that you’re ready to make a strong offer in the event you find your dream home.
The housing industry is a giant segment of the economy—an entire ecosystem that keeps millions of people employed. That’s why there are so many resources catering to potential home buyers: from listing websites to learning tools to guides, videos, and everything in between. If you have any questions, no matter how specific, there’s a good chance you can easily find the answers you’re looking for.
Pictures don’t always tell the full story. This can be a tough lesson to learn, especially if you get your hopes up. The good news is that this works in both directions. Sometimes, photos make a home seem a lot nicer than it really is. But, just as often, pictures don’t capture the entire essence of a house and might fall short when it comes to showcasing its more positive attributes. The bottom line is that you should see it in person to be sure.
Unless you’re looking in an especially unique area, you’re likely to find plenty of competitors when a listing is a great deal, or when it has “everything” most people are looking for. There are exceptions, of course, and sometimes you might get lucky, but for the most part, if you recognize a great opportunity, there’s a good chance other people will too. It doesn’t even need to be a “deal”…it can just be when a house is priced appropriately within the market. Always expect that if you see the value and appeal of a home, so will another buyer. So, act quickly, and write up a strong offer!
Don’t feel silly if you find yourself filled with anxiety after submitting an offer. And definitely don’t be hard on yourself if you’re anxious even after your offer has been accepted. It’s completely normal to worry about all the decisions, stresses, and eventualities as you’re going through the process.
If you think an accepted offer means you’re done, think again. In some ways, this is when the real work starts. A lot of the work will be done for you by industry professionals, but you will need to be ready and aware of anything they need you to do on your end. For example, lenders will want contract and financial documentation, and title companies will need you to review documents and sign off or acknowledge them.
Don’t be afraid of the nuances and moving parts of buying a home, because from day one, you have plenty of resources at your fingertips. Your agent, your mortgage broker, your title company, and everyone in between will be able to explain the process and answer questions as you move forward. These people usually have years of experience, and none of them will begrudge you for not knowing everything they know. And if you have questions or something doesn’t make sense, don’t be shy…just ask! That’s what they’re there for!
Renters don’t have the same skin in the game that owners do, and when you’ve bought something and put your money and credit on the line, it feels different. Once you close on your home and move in, you’ll start to understand the feeling of commitment and ownership that comes from your own space. You’ll not only want to make it yours, but you’ll also feel a sense of pride and care that is often elusive for renters.
Some people think of real estate agents as cashiers: people who help you with a transaction before you move on and forget all about them. But in practice, this is often not the case. Buying a home is such an emotional journey for even the most stoic among us that it’s almost impossible not to form a deeper connection with the person helping you find the perfect home, and guiding you through the process. Agents will serve as consultants, confidantes, interior designers, therapists, and everything in between. Agents become a part of one of life’s biggest milestones, and this makes it nearly impossible for them to take it lightly.
Hopefully, this will make you a more confident buyer and help take some of the surprises out of the process for you!