What to Expect from 2023 Real Estate Market
2022 was a year to shake things up in the Real Estate Market across the country. As the Federal Reserve slowly raised interest rates throughout the year, the fervor of homebuying peaked and diminished through the end of the year. This is directly correlated with mortgage interest rates, the political season, and home buying trends from year-to-year. The chips are stacked for an interesting 2023. Here are a few things to look out for and ways to prepare for them.
Higher Interest Rates
Yes, it is predicted that the Federal Reserve will raise rates again in 2023. The domino effect will reach mortgage rates, car loans, personal loans, credit card interest rates and potentially more. How should you prepare for that? Well, talk to your lending agency now and lock-in a loan so you know what your interest rate will be. Another way to prepare is to increase your savings for your down payment. We did see mortgage interest rates drop at the beginning of December in an attempt to stimulate home sales. With the economy leveling off into the new year, this may turn back around and rise above 7% once again.We must remember, over the past 30 or so years, 7% has been the average mortgage interest rate.
Slowly Rising Home Values & Rental Costs
Higher interest rates means fewer individuals qualifying for loans in the short term, which means less competition for homes on the market and, therefore, slower rises in home value. Some areas over the past few months have seen slight, ever so slight, decreases in the average value of homes sold, but overall we are still seeing a rise in home valuations. Colorado is still a desired place to move. This is the main reason why, in the face of rising mortgage rates, home values and rents are predicted to rise in 2023.
More Inventory & Options
The heat is coming off the selling market from the past two years. As we’ve mentioned, less competition and higher mortgage rates goes hand-in-hand with more inventory and more options. This will come as a relief to buyers; especially first time home buyers. With more options and inventory, one can spend more time looking around. Over the last few months, houses have stayed on MLS for two to three times longer than the last few years.
This is probably the best news! Over the past few years there has been less negotiation power with homes moving so fast through the market. When performing a walk-through, take note of any repairs, replacements, or fixes that might sweeten the deal for a purchase. Then talk to your realtor about building the perfect offer with any of these options as negotiations. Make sure to look over everything from roof repairs to appliance replacements; and feel free to ask for any furniture or decor that is there as staging.
Time To Think
As you can see, there is also going to be time to think in 2023. Homes aren’t moving fast. It’s taking more time to get approvals for loans or save up for down payments. The stress of moving with the pace of our real estate market is lifting, giving buyers much needed time to choose. This also helps sellers as well, as they await offers and consider their own offers.
What are your goals for 2023 in the real estate market? Are you moving, buying or selling? Keep an eye on local Colorado Trends with The Wise Team. Give us a call when you’re ready to take your first steps in your real estate adventure.