Q1-2023 Housing Market Report & Predictions
We are a ways into Q1 of 2023 and I’ve got a pretty good idea of how things are flowing. Today we are going to take a look at how the 2023 national housing market will most likely behave moving forward from the perspective of a residential buyer. Let’s talk about it!
My name is Greyson Roberts, Realtor and owner of BOSS Properties. Consider us your one stop shop for all real estate needs! Whether you’re looking to buy, sell or invest, we can help nationwide. Give me a call or text, I’d be more than happy to serve you! I also want to state that if you’re looking for true future indicators for an in depth market prediction, stay tuned for my investor version.
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Yearly Real Estate Cycles
First things first, the real estate market is cyclical. Meaning, like clockwork, every year the spring is considered the beginning of the “buying season” and that lasts all throughout the summer. During the fall and winter months when the weather cools off, everyone stays inside and enjoys the holidays, the housing market also cools off!
Q1 of every year is usually still fairly slow as the momentum builds throughout the year. This year is actually a little different because we are recovering from historically high home prices. Also, probably the single largest factor that we will discuss momentarily, is the interest rates.
Home prices
Now, home prices are still high. However, due to the increase in rates, we are seeing a nationwide drop in home prices. Sellers are going to continue to be forced to lower prices which will increase the inventory. Increased inventory alone will also help reduce prices. This is the first time since Covid where you may actually be able to scoop up a property below asking.
This is great for buyers. Finally you’re able to start requisitions, seller concessions, repairs and have an increase in leverage while negotiating. This is a shift from an extremely strong sellers market to more of a buyers market. All of this is happening due to the rise in interest rates.
Interest rates
The general predictions from companies across the world is that the average rate for a 30yr fixed mortgage will be around 6.3%. This is a far cry from the average of 3.11% just one year ago. When interest rates shoot up, your buying power decreases. Every 1% interest in rates lowers your budget roughly 10%. Let that sink in!
As you can see, when rates rise, home affordability goes way down. Even if you can afford it, nobody wants to be stuck with a 6% rate. This lower demand massively, which is why it depresses the housing market so severely. Now, if the rates remain around 6% throughout Q1 this could make homes finally more affordable again if the rates end up going back down relatively quickly.
I predict that there will be a time this year that will hopefully prove to be a great buying opportunity. Right now, as we speak, isn’t a great time to buy for most folks. There’s always money to be made in every market but this video isn’t for savvy investors. This video is for people who just want a summary on if it’s smart to buy right now or this year.
To put it simply, yes! Since it’s free, hire a competent Realtor who actually specializes in investments. The reason for this is because these types of agents look more at the numbers than how cute the kitchen is. These types of agents are so much more equipt to get you a good deal in any market. You’ll have to keep an eye out for the cute kitchen yourself, because these agents don’t have eyes for that. You find the cute kitchen, they’ll give you an honest answer of if you should buy.
Conclusion
There you have it! Q1 of 2023 isn’t super great for anyone, buyers or sellers due to the interest rates. However, I personally am optimistic toward Q2 and beyond. I think the days of the housing market getting worse is behind us. You have a lot of doomsdayers that have been preaching a housing crash for months and some even more than a year ago. As you can tell, you should not be waiting around for a 30% discount because, well, that’s just silly. Subscribe and I’ll explain in another video.