2023 has been an unpredictable year in the housing market. After the upheaval of the pandemic and the low interest rates we saw over the last two years, it seemed like a return to normal was coming this year. And one of the ways the market was going to get back to normal was that the hot spring selling season was going to return.
But that never really happened.
High interest rates and a stubbornly low number of homes for sale cooled off hopes for a hot market this past spring. Upheaval in the banking sector scared a lot of folks away from making big purchases, as well.
Now the question is, is that behind us? And what can we expect as the weather gets warmer?
Will mortgage rates keep rising with the temps?
There are so many factors that affect mortgage rates, and that makes it hard to predict if they are going to go down or up. However given what is going on in the market, the bottom line is there’s no reason to be optimistic that mortgage rates may come down, but we’ve seen many unexpected events affect mortgage rates. It’s so unpredictable. So, if you find a rate that you can afford for a home you love, jump on it. Ask your loan officer about the various programs available to help your offer stand out in case you get into a bidding war.
Looking ahead at housing inventory.
The number of homes for sale, also called inventory, has a direct impact on the prices of homes. It’s simple supply and demand—when there are fewer homes for sale, prices go up as buyers compete to buy those homes.
That’s why it’s been good news over the spring that the number of homes for sale has been steadily increasing.
Bottomline is housing inventory may be moving upward, but it’s not as high as it needs to be in many sought after markets or in the lower price ranges. This may lead to more competition and more bidding wars. Make sure you know all of our tips for winning a bidding war.
Also, with inventory low, you may have to widen your sights for what you want in a home. Buying and then renovating a fixer upper or a home lacking one of your must-haves, like a second bathroom, can be a great solution to low inventory. Talk to our loan officer about a renovation loan program and create more inventory for yourself.
What to expect with home prices this summer.
With inventory rising, the question then becomes, are home prices going down at the same rate that inventory is going up?
June of 2022 was the high point of national average home prices, and they dropped steadily until they hit a low this January. Then they started rising again. If that trend continues, expect to see a rise in home prices in the summer, even if inventory continues to grow.
Note home prices are down from their high of last summer, and inventory is on the way up. Those are good indicators for a homebuyer. But don’t wait as home prices could keep going up this summer. And remember that you could use a temporary buydown on your rate to help make the first few years of your mortgage more affordable.
How hot will it get?
That’s the question every summer, and we’re not just talking about afternoons around the pool. Because of the factors we just went through, it’s hard to predict how hot this summer’s housing market will get, but it’s safe to say that it will not be as bonkers as it was last summer.
It really will depend on how many homes are for sale in your desired area. That will affect home prices and also how many buyers are likely to be in the market. Another factor is mortgage rates, obviously.
The secret to making the most out of this summer is to be prepared to be the best buyer you can be, work closely with an experienced real estate agent and get pre-approved from our expert loan officer. Then you’ll be ready for whatever surprises the summer has in store.