Buying a house in any kind of market is a major decision. Homes often represent the single biggest purchase people make in their lifetimes. It is essential to be well-informed and confident about your financial position before buying a new house. A new year brings new opportunities, and is a good time to learn more about what is happening with the housing market.
What Are Current Trends in the Housing Market?
After a red-hot housing boom that saw mortgage rates plunge to all-time lows and home prices hit new highs, the United States housing market is slowing down. During the pandemic, the housing market surged while homebound people sought new places to live, encouraged by record-low interest rates.
Low interest rates and elevated prices caused mortgage rates to sky-rocket to the highest level in 20 years, leading to a slowdown of both buying activity and purchase prices. After house prices hit all-time highs across the nation, real estate agents who were seeing multiple buyers at open houses and massive bidding wars, now report that houses are sitting longer, and sellers are being forced to lower their prices.
Now that bidding wars have largely faded and inventories have loosened, the market is turning. The good news that house prices are approaching the bounds of affordability for first-time home buyers. How far house prices will dip in 2023, largely depends on the flux of mortgage rates.
Is the Housing Market Going to Crash?
Now that the housing boom is threatened by increased mortgage rates and a potential recession, homeowners and buyers are faced with the familiar concern of a housing market crash. However, while demand and price gains are cooling, housing analysts and economists predict that any correction or turndown is likely to be a moderate one.
Housing experts and economists point to the following reasons for the general consensus that there will be no imminent housing crash:
- Inventories are still low.
- Homebuilders did not build fast enough to meet demand.
- Demographic trends are creating new buyers.
- Lending standards remain strict.
- Foreclosure activity has muted.
What Should I Expect for Mortgage Rates and Types in 2023?
Mortgage rates are still more than double what they were approximately a year ago. Experts opine that mortgage rates may continue to increase for another few weeks, with seven percent looking to be the level for most of 2023. Over the next two years, mortgage rates are expected to return to between five and six percent.
In light of mortgage rates being high, home buyers are more likely to go with adjustable-rate mortgages (ARMs) through the next year, rather than take the route of a traditional 30-year fixed mortgage rate. A 7 to 10 year mortgage will be preferable to an 30 to 40 year fixed rate for many home buyers this year, as a result of increased mortgage rates nationwide.
Should I Buy a House in the Current Market?
Although it is still considered a seller’s market, home buyers are finding a bit more breathing room with options to consider. Sellers are likely to keeping lowering house prices, as it is accepted that the prices from the last couple of years are now unattainable. In particular, home prices in expensive markets and other areas that saw substantial price gains over the last few years are expected to decrease over time.
Buyers are finding more options as home prices continue to drop. Moreover, mortgage products have become less volatile and less risky with more regulations and restrictions in the mortgage market.
As previously mentioned, buying a home requires planning. However, it is impossible to predict the future and can be difficult to count on “perfect timing.” Staying well-informed and consulting with an experienced real estate lawyer will help ensure that the process go smoothly whenever you decide to purchase a new home.
Annapolis Real Estate Lawyers at Oliveri & Larsen Provide Sound Advice and Guidance in All Real Estate Matters
If you are a property owner or buyer in Maryland, it is important to work with a skilled real estate lawyer who knows the laws, rules, and regulations, and stays on top of the housing market. Our Annapolis real estate lawyers at Oliveri & Larsen are here to address your questions or concerns, and help you achieve your real estate, business, and financial goals. Call our team at 410-295-3000 or contact us online to schedule an initial consultation. From our office in Annapolis, Maryland, we proudly serve clients in Ocean City, Anne Arundel County, Baltimore County, Baltimore City, Calvert County, Hartford County, Howard County, Queen Anne’s County, St. Mary’s County, Worcester County, Kent County, and the upper and lower Eastern Shores of Maryland.