Source: TAP Into Nutley —
What lies in store for the housing market in the Spring of 2023? That’s the real question, isn’t it? With a dizzying myriad of factors all weighing in the balance, what are we to make of the state of the housing environment, and what will the next few months look like?
We’ll discuss all those things as we once again put on our thinking caps to make our predictions for Spring for 2023, and what that means for both new and returning homebuyers.
Start of Spring Selling Season
Normally the colder months see a decrease in the number of home sales. As the days get longer, and temperatures start heating up, however, Spring is when the market begins to bloom. Generally speaking, we should expect to see more homes going on the market — with a commiserate number of home hunters to go with it.
So, if you’re going to be shopping for a house in the Spring, be prepared to have more competition than you would have in the Fall and Winter. Conversely, the variety of homes available for your consideration will be greater.
Bottom line: We recommend getting your FICO® score in order as well as getting pre-approved even before you start the house hunt. Both of these things can give you an edge in a market that you should expect to be at least partially contested.
Where are rates going?
If you’ve kept an eye on mortgage rates over the last year, you’ve noticed that they’ve gone up steadily, peaking at just above 7% towards the end of 2022. Since then, the rates have come down to around 6.32% at the time of this writing, which is well under the historical average of 7.75%.*
As Lawrence Yun, Chief Economist for the National Association of Realtors (NAR), put it, “The upcoming months should see a return of buyers, as mortgage rates appear to have already peaked and have been coming down since mid-November.”
While, the FED may continue to raise rates in a bid to defang rising inflation, the result of that would inevitably lead to a rise in mortgage rates. The correlation is not exactly one-to-one, but these inflationary measures are likely to continue until the FED is satisfied with the result.
How high rates go will really depend on how successful these actions prove to be. However, once certain metrics are met, we should expect that rates won’t stay high just for the sake of it. Eventually, rates will come down, but just how long that will take is something that’s difficult to forecast.
Bottom line: As the axiom of modern mortgages goes: Date the rate, but marry the house. Even if mortgage rates seem like a barrier to homeownership, the possibility of refinancing or using a temporary buydown like our Rate Reduce program are ways to help mitigate the situation whether rates stay the same, drop or go higher.
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