Real Estate Market Update 2023
The state of the real estate market in 2023 is a hot topic of discussion. In this comprehensive update, we’ll dive into current conditions and the factors shaping the market. If you’re considering buying or selling a property this year, read on to get a clear picture of what to expect.
Current Market Conditions
Mortgage Rates Soar
It is no secret that mortgage rates are the highest they have been in 20 years, with the current national average on a 30-year fixed mortgage being 7.53%.
This high interest rate not only burdens buyers with higher monthly payments but, due to high demand and limited supply, it also requires a larger down payment on a single-family home, which has increased in value by 88% over the past decade.
Factors Driving Housing Costs Up
Multiple factors are involved in the current real estate market that are making it difficult to buy a home. Rising interest rates, lack of inventory, high demand, and tightening of liquidity are all playing a role. Between February and May of 2023, home prices increased by 4%, according to the CoreLogic S&P Case-Shiller Index released in July.
Impact of Interest Rates
Changing Interest Rates
The days of 3% interest rates are likely gone for the foreseeable future, maybe even our lifetimes. Those who took advantage are hesitant to sell, refinance, or even buy. This is putting a strain on inventory, as people cannot afford the rising costs of home values, higher monthly payments, and ongoing inflation impacting the cost of living.
To give an idea of where national mortgage rate averages were at the past couple of years:
- 2019: 3.94%
- 2020: 3.10%
- 2021: 2.96%
- 2022: 5.24%
- As of September 2023: 7.52%
Future Market Predictions
What Lies Ahead for Home Values and Rates?
According to Goldman Sachs, the next 4 years of home appreciation might look like this:
- 1.3% growth in 2023
- 1.7% growth in 2024
- 2.4% growth in 2025
- 3.8% growth in 2026
It’s important to note that since 1976, national home prices have appreciated at an average of 5.5% per year.
Inflation and Unemployment
Goldman Sachs also predicts inflation and unemployment to be in good standing in the coming years.
The Consumer Price Index is expected to do the following:
- 2023: increase by 3%
- 2023: increase by 2.8%
- 2025: increase by 2.4%
- 2026: increase by 2.4%
The unemployment rate is predicted to remain under 4% through 2026.
Mortgage Rates
In terms of mortgage rates, Goldman predicts stagnancy, with rates hovering around 6% for the next 3-4 years. This stalemate is largely due to 80% of current homeowners with low-interest rates feeling “stuck” in their situation, and likely for years to come.
National Association of Realtors: Housing Affordability Index
Current Buyer Trends
Migration trends have been noteworthy since the pandemic, with the work-from-home era bringing people out of metropolitan areas and into suburbs and rural settings. But are there trends to be aware of currently?
You might have heard in the news that certain states are getting more attention than others.
Buyers in Today’s Market: Baby Boomers and Cash Buyers
Baby boomers have overtaken millennials for the first time since 2014, according to the National Association of Realtors generational trends report.
This should not come as a big surprise, as Baby Boomers hold the most generational wealth (78.3 Trillion Dollars in Assets $$$$) and can weather the storm of record high real estate prices as a result.
What is the most motivating factor to buy a home in 2023? To be closer to family, of course.
Current Migration Trends in 2023
The Bank of America Housing Morsel Report indicates the Bay Area, Seattle, and New York are losing the most residents as they tend to seek better weather, lower cost of living, and growing job opportunities in Austin, Tampa, Orlando, and Cleveland.
The Future of Real Estate in America
What does the future of real estate look like in America? Just as it was impossible to predict the housing surge brought on by the pandemic and a perfect storm of low interest rates and the work-from-home phenomenon, it is also impossible to predict what crazy outside influences might affect us again.
Based on the data and professional opinions of Goldman Sachs, Bank of America, and the National Association of Realtors, one can guess that the current market conditions are here to stay for a while.
Does that mean you should sit on the sidelines? Absolutely not. Always be prepared by knowing the value of your home, what you owe on it, and what your spending power is.
One great way of obtaining your home’s value is through our Real Estate Evaluations. Akrivis provides real estate valuation services that are a fast and cost-effective approach to obtaining the most up-to-date and accurate value of your home. If you would like to learn more about the current real estate market or are interested in having your real estate evaluated, please contact our valuation experts today!