The Latest Real Estate Trends This Year
The real estate market is evolving and buyers need to stay informed of the latest trends. Whether you are looking to upgrade to a new home or you are looking to become a first-time homeowner, it is important to know what to expect this year so you can navigate the real estate market. Some predictions include a gradual drop in prices, growing interest rates, and an increase in houses on the market. Let’s take a close look at these trends in the housing market in 2023, as well as some tips for buyers that are ready to purchase a home this year.
Housing Trends in 2023:
- It is a Buyer’s Market. Although housing availability will still be tight compared to pre-pandemic levels, there will be more homes for sale in 2023, so it might be easier to find a property within your budget. Home prices and inventory are moderating, so home buyers are more likely to find more negotiating room in 2023. Sellers are more likely to accept contingencies such as home inspections, appraisals, and financing.
- Prices of homes will grow at a lower rate. As mortgage rates pick up, buyers’ borrowing power drops and sellers will have to deal with a lower demand. This results in lower listing prices and acceptance of lower bids. Housing price movements can vary greatly by location, so it’s important to speak with real estate experts in your area to get an idea of what to expect.
- Increased interest rates will result in increased mortgage rates. In 2022 the inflation rate reached a level we haven’t seen since the 1980’s. In 2020, the Federal Reserve lowered interest rates to stimulate an economy stunted by the pandemic, which made getting a mortgage more appealing to many Americans. But with the economy inflated, the federal reserve increased interest rates accordingly. It is uncertain how the rates will behave in 2023, but most likely an increased interest rate is inevitable. It is important to remember though, that even if mortgage rates go up, they are still relatively low in historical terms.
Here are some helpful tips for buying a home in 2023:
- Put your savings in a high-yield account. Consider putting the money for a down payment, closing costs, and cash reserves in this account. Interest rates on certificates of deposit and savings accounts have been rising, so you may get a strong return on your money. Buying a house is costlier than you think, so begin growing your savings account balances early. You’ll ideally want to have a 20% down payment before purchasing a home so you can qualify for the best loan rates.
- Lock in an interest rate quickly in order to limit your exposure to increasing rates. Consider paying for a longer lock period if possible. The best way to secure a low interest rate is to shop around for a loan, improve your credit score, lower your debt-to-income ratio and make a large down payment.
- Determine what you can realistically afford. Before shopping for a new home, take a close look at what a higher interest rate will mean for your monthly mortgage payments. Determine what you can realistically afford each month and still have money for living expenses and savings. Remember that you also must leave room in your budget for property taxes, maintenance, and insurance. Even if you’re earning a good income, it’s important not to overstretch yourself when buying a house. You can calculate how much house you can afford by looking at your income and debt. You can use an online mortgage calculator to get an estimate of your monthly mortgage payment. The 28/36 rule is a guideline that lenders use to determine how much you can afford to spend on a house. This rule stipulates that your monthly mortgage payment (including property taxes and insurance) should not exceed 28% of your gross income.
- Check your credit report. You can obtain a copy of your credit report at no cost from Annual Credit Report.com to see what areas you need to work on. Lower rates may be available if you have strong credit. Mortgage programs usually set a minimum credit score to qualify for a loan. Anyone seeking to buy a home with a low credit score should take steps to improve the credit before seeking preapproval from a lender. Mortgage lenders want to see that you have a good credit score, don’t owe too much, and have been responsible in borrowing money. When buying a home, you need to present yourself as the most credit-worthy borrower possible.
- Consult with a Real Estate professional in your local market. These trends are predictions made by economists and analysts, focusing on what they predict will happen nationwide in 2023. Local real estate agents will have the pulse on the trends in their own area.
Follow these tips and you will be well on your way to achieving your dream of becoming a homeowner in 2023. Once you determine you are ready to buy a house, there are some simple things you can do to make the process go as smoothly as possible.
- Find the right type of mortgage. There are many mortgage types available, each with its own set of pros and cons. Home buyers must determine if they want a variable rate or fixed rate mortgage, as well as how long the mortgage term should be – 15 or 30 years.
- Get a home inspection. This will help ensure that all necessary repairs are done and that the house is in good condition. A home inspection can also help with the negotiation of the purchase price.
- Get pre-approval. A mortgage pre-approval will help a home-buyer have an idea of what interest rate he or she will be paying based on their credit score. It will show sellers that you are a serious buyer.
- Determine the appraised home value. A home appraisal is essential to ensure that you are not overpaying for the home. The appraisal could determine that the value of the home is lower than the asking price, which will provide negotiating power for the buyer. The buyer usually pays the appraisal fees.
- Find the right real estate agent. Choosing the right agent is critical in order to have a positive and successful home-buying experience. They can guide a buyer through the entire process.
Despite the increased mortgage rates, there are plenty of great reasons to buy a home in 2023. In the competitive market we have today, the right real estate Realtor and Broker makes a huge difference.
Boyle & Kahoe Real Estate is a team of local real estate professionals committed to selling some of the most desired homes in Harford County. Selling these “right addresses” is the mission of Boyle & Kahoe Real Estate. Let us know what you’re looking for. Our goal is to be informative and helpful. Through our service we hope to earn your business with our exemplary level of service and extensive local knowledge of Harford County and the surrounding areas. Contact us for more information.