Will 2023 be a better Time to Buy Than 2022?

Buying a home is a financial commitment, regardless of the market conditions. But after a record-setting rise in home prices in 2021 and 2022, and mortgage interest rates rising to the highest mark in two decades, there are a few things for prospective homebuyers to keep in mind for 2023.

In 2022, the inflation rate has reached levels the country hasn't seen in decades, and it's uncertain where rates will go in 2023. But other factors, such as the Federal Reserve's monetary policy and housing market conditions, also have an impact on home loan rates. 

The housing market is a complex beast, and no one can predict exactly how it will perform in the future. But for people who want to buy a house, here's what we think will happen in 2023:

Home prices will continue to rise

The good news is that you'll be able to sell your house in 2023. The bad news is that it will be worth more than when you bought it. In fact, median home sale prices are expected to increase by 6%, according to Zillow's 2020 housing forecast. Much of this growth will come from a continued rise in home values—Zillow predicts a 4% increase in the next year alone—but some of it will also come from rising interest rates, which are expected to drive up demand for buyers who want to lock in their mortgages before rates go up further.

If there's any reason for optimism here as an owner, it's that these hikes won't keep pace with inflation (which is projected at just 2%). That means if you were able to buy into today's market 10 years ago at $100k and sold today at $160k, even after accounting for higher taxes and fees due on those sales, then overall the value would have gone up about 50%. Not bad! But if this trend continues into 2023? You're looking at over 100% profit!

Mortgage rates will be very low

We can expect mortgage rates to remain low for the next few years, but after that they're expected to rise. If you're planning on getting a home loan in 2023, we recommend waiting until 2024 if possible. The same goes for purchasing property—if you can wait five more years, it'll likely be better for you because interest rates will have gone up by then.

Affordability will be a major hurdle

While there are a lot of factors that affect the housing market, affordability will be one of the biggest hurdles in 2023.

Home prices have risen significantly over the last several years, and it’s predicted that they will continue to do so (even if at a slower pace). Additionally, low inventory and rising interest rates mean buying a home is becoming more expensive for many buyers. All these factors will make it difficult for prospective homebuyers to enter the market unless they’re able to secure financing that meets their needs.

The market will become more flexible

The market will become more flexible. This is a good thing, because it will help people find homes they want to live in, sell their homes and move on when they're done with them, rent out their homes when they don't need them or just don't want them anymore, and buy new ones as well.

The housing market will tighten

-The housing market will tighten.

-Comparing 2019 to 2023, there will be:

-Less inventory to choose from

-More buyers than sellers

-More buyers than houses for sale

-More buyers than houses for rent

Inventory shortages will persist

The number of homes for sale will continue to be low. And the number of listings for sale will also continue to be low. Why? Because people are holding on to their homes, hoping that prices will increase even more at some point in the future.

However, there is a silver lining: inventory shortages will persist and that means homebuyers should have plenty of selection available when they're ready (and willing) to buy!

If you're moving from a place with much cheaper houses, then it's better to buy in 2023.

However, if you are staying in the same place and don't expect your income to increase over time, then it's better to sell in 2023.

Conclusion

So what does this all mean for you? If you are looking to buy a home in 2023, it might be worth waiting until prices come down a bit. But if you're selling your house and planning to move somewhere else, now is definitely the right time! The market will still be strong then, so don't hesitate when deciding whether or not it's time for another move. We hope this article helped inform you about some trends in real estate over the next few years. Good luck with whatever decision comes next!