Your 2023 Market Update
As we begin the year, you may be wondering: what can we expect from the housing market in 2023? There’s good news to be had in the face of the wild fluctuation and activity over the past year—the market is beginning to settle down to more normal levels. Let’s take a look at what that entails...
One of the biggest turnarounds from the past year is the amount of available housing inventory. In the Phoenix metropolitan area alone, available housing inventory increased 257 percent from January to September of 2022—a staggering jump.
Gone now are the days of sellers receiving multiple offers that are tens of thousands of dollars over the asking price within days or even hours of listing a property. As the cost to borrow money has increased with rising interest rates, some buyers have been priced out of the market, leaving homes that may have been fiercely contested a year ago to linger.
Given less competition and more supply to choose from, buyers still on the hunt may be in no rush, and content to take their time when making an offer. The average time a home stays on the market today is around 55 days, which is still fairly low when compared to numbers historically.
Declining Home Prices
To keep pace with the rising interest rates and declining demand for housing, home prices are beginning to creep back down into a more normal range from the inflated list prices of the last couple of years. Experts are anticipating a minimal decrease of about 4 percent. But even so, overall affordability is expected to be lower than it was before the COVID-19 pandemic began.
The Potential for Stabilizing Interest Rates
Outside of the mortgage market, overall inflation is beginning to slow as well. If the current trends persist and the rate of inflation continues to decrease, the Federal Reserve may eventually choose to stop raising—or even begin lowering—interest rates, which could allow more buyers back into the market. While the Fed does not dictate or control mortgage rates, the Fed Rate impacts how investors buy and sell Mortgage Back Securities through the bond market.
Overall, these shifting trends give both buyers and sellers a more equal shot at success in the current market. Regardless of what side of the table you may be on this year, there are some things you can do to help you meet your 2023 homeownership goals:
For buyers, seeking pre-approval from your mortgage lender before starting your search for a new home can be a point in your favor, as pre-approval removes an element of uncertainty for the seller when entering into a contract.
Potential buyers can also maximize their bargaining ability by requesting an interest rate buydown, which would lower their interest rate for the first few years of mortgage payments.
The greater Phoenix area is officially in a back into a balanced market. The buyer's market only lasted 4 weeks. Demand went flat and supply came down. That being said, taking extra steps to create a stellar first impression of the home, such as having high-quality photos or video, can also help secure the price you want. There are still some cities in a mild buyer's market to include: Avondale, Peoria, Surprise, Goodyear, Queen Creek, Maricopa and Buckeye. The remaining cities are in a balanced or sellers market.
For both buyers and sellers, it is important to keep a long-term approach to homeownership in mind and resist trying to time the market.
If you are looking to buy or sell in 2023, we would love to help you create a plan to reach your homeownership goals. Connect with me today!