In 2021 and 2022 several market factors combined to make things hard for first time homebuyers. First, constrained supply of homes on the market combined with low interest rates made home values skyrocket all over the country. Then mortgage interest rates shot higher in 2022 and that priced many first time homebuyers out of the market.
The good news is market conditions appear to be poised to make 2023 a good year for homebuyers. Here are some of the factors at play:
1. Supply of homes has gone way up. With rates moving higher in 2022 the number of home purchases dropped. That has allowed the supply of homes on the market to replenish to pre-pandemic levels in many markets
2. Bidding wars are mostly gone. In 2021 and 2022 homes were getting snapped up immediately, often over asking price. With more supply of homes on the market, the trend is now that buyers have the leverage and are often able to negotiate to have the seller pay closing costs or lower the purchase price.
3. Rates are off their peak. The average 30 yr fixed mortgage rate in the US was above 7% in the fall of 2022. Rates have dropped below those highs again, making it easier to afford mortgage payments on home purchases again.
4. Homebuyers are in charge now. With more homes on the market, sellers are forced to be more aggressive to sell their homes. They are dropping asking prices and have been willing to give large concessions for closing costs in many cases.
All in all, 2023 is shaping up to be a good year to buy a home compared to recent years. Yes, rates are still above the historic lows we saw in 2021 and 2022, but with home values dropping again and bidding wars mostly gone, homebuyers have a solid chance of negotiating an attractive purchase price and terms.
Fill in the contact form at our home purchase page to learn how much you could qualify for and perhaps start shopping for homes.