What buyers need to know
The 2023 Housing Market
According to the National Association of Realtors (NAR) ‘2022 may be remembered as a year of housing volatility, the 2023 housing market will likely become a year of long-lost normalcy returning to the market – mortgage rates are expected to stabilize while home sales and prices moderate after recent highs.’
Let's start with a review of 2022
The home buying boom of the pandemic, with people moving out of the city to the Conejo Valley to get more space, driven by record low mortgage rates (less than 3%), saw a shift in May 2022. Mortgage rates more than doubled in a matter of months, softening buyer demand and causing home prices to adjust from their peak. Buyers gradually returned, this time with less competition and more bargaining power.
What's next in 2023
The NAR predicts that 2023 will bring a return to market normalcy. We expect mortgage rates to stabilize, while home sales and prices moderate. So far, this has certainly been the case in the Conejo Valley.
Good News for Buyers
Negotiable Sellers: The expectation of rapid, over-asking-price sales has waned, yay! Sellers are becoming more motivated and negotiable, offering buyers more room for considered decision-making.
Mortgage Rates Expected to Decrease: Mortgage rates are forecasted to drop throughout the year, bringing more buyers back to the market.
Price Adjustments: Prices have corrected in line with current mortgage rates. As rates come down in 2023, we could see prices start to rise again.
Reduced Competition: The rise in mortgage rates has reduced competition, but historically low inventory levels will prevent a full-fledged buyer’s market.
Seller Concessions: Sellers are more open to making repairs and addressing safety issues.
Creative Financing: The rise of new loan programs and rate buydowns are offering more palatable solutions for buyers. Make sure to interview a few lenders to find your best option.
Challenges in 2023
Low Inventory: This continues to be a major hurdle. The supply-demand dynamics, especially in built-out areas like the Conejo Valley, will continue to impact the market.
Prices Stability: Homeowners have significant equity and the demand remains reasonably high. Thus, we don’t expect prices to fall significantly in the Conejo Valley.
Higher Mortgage Rates: We’ve likely seen the last of sub 4% mortgage rates for a while. Rates in the 5-7% range are expected to persist.
2023 Take Away
Fewer homes will sell in 2023, with prices remaining relatively flat due to low inventory levels. However, the anticipated drop in mortgage rates may reheat the market, leading to a resurgence of bidding wars and price appreciation into 2024. Buyers should act early in 2023 before prices potentially rise again.
Remember, you marry the purchase price and date the mortgage rates!