The current and predicted state of the 2023 real estate market certainly looks different than it did a year ago. Unfortunately, sellers want to sell like it’s 2022 and buyers want to buy like it’s 2008.
As everyone knows, mortgage interest rates have skyrocketed and are double what they were last year. There are mortgage companies that are closing their doors, sellers who can’t get their homes sold, and buyers who are disappointed that their dream home they didn’t get last year now seems like it will never happen.
Life happens and people move
Many homeowners who have a lower interest rate may choose to stay put for now. But there are also plenty of sellers who may need to downsize, move out of town for family reasons, or relocate due to a new employment opportunity.
Without knowing where interest rates will end up and what that will do to our economy and inflation overall, we have to take real estate a step at a time. And we will! No matter what you may hear or read, the sky is not falling.
One thing about real estate is true. People will always be moving. Real estate happens because life happens. I recently sold a house for a family who moved to Colorado, another past client who got married and moved into his house, as well as a family who moved to California to be closer to family members.
Baby boomers are still going to downsize
I work primarily with baby boomers that are in the process of downsizing. The reasons for their downsizing are many but add a possible recession into the mix and that gets them thinking and moving even faster. Many of my boomers that are on a current 5 Year Plan, have indicated to me they want to move things up and do something by the end of 2023. Some of them are going to get serious about getting rid of their stuff – sooner than later!
Regardless of the current economy or inflation, we have to deal with it is what it is. In other words, I bought my first house in the early 80s when interest rates were 16.75%. I was pregnant with my daughter and we were renting a small 2-bedroom house. I wanted to get situated for the new addition to our family. Had we waited for rates to come down, it could have taken years. We made the necessary adjustments and made it happen.
How to adjust to an uncertain real estate market
First of all, set aside everything else for a minute. Before anything, you need to decide what’s important to you. What are the alternatives if you sell your house in 2023 or don’t? If you’re selling your home, why are you doing that? Do you have the time and the health to wait until the real estate market corrects? And will it ever?
If you’re buying, how important is it to you to become a homeowner? Why are you doing that? If you decide to forge ahead, you need to know that there are many great programs and options out there to get into a mortgage interest rate that works for you.
I’ve been selling real estate for over 35 years and rates had never been at 3- 4% until recently. So live your life and quit trying to predict what’s going to happen. Do what matters to you. Quit listening to others.
The predicted state of the 2023 real estate market – 3 things I know for sure
Rates will remain higher than in 2022
At this time, I would imagine rates will probably end up around 6% or a little bit lower. What can you do about that? Absolutely nothing. I don’t like the price of a dozen eggs either but I can’t change it.
If you’re buying your first home, rates may be higher than you want but your rent will continue to go up as well. Are you going to continue to move every year to save a few bucks on your apartment rent because a new complex offers you a deal?
Home prices will decline
Will home prices decline or readjust? Home prices must re-correct every few years to get the market leveled off. It tends to happen every ten years or so. Trouble is, if you have to sell that house you overpaid for in 2021 or 2022, it’s not worth what you paid for it then so it becomes a real problem when the market shifts.
Home sales will decrease
It’s only natural that people tend to want to hunker down when the going gets tough. If you want to sell in 2023, be a smart seller and understand what it’s going to take to be the best house to choose from. There is no runner-up in the game of real estate. You either win or you lose.
So, if you’re selling, sell smart and do it now because as home sales drop, you’ll have more opportunities. Pick the best agent who has experience in navigating a challenging market. Home staging is more important now than ever. If you are still living in your home, hire the best stager to create that model home look that every buyer wants and will pay more money to get.
And if you’re buying, you’re going to have to lower your expectations a bit. It’s ok. Rates may drop a little later in the year but be smart and buy now while other buyers are waiting for the rates to drop. You’ll be in a better buying position with less competition and won’t be overpaying for a home like your friends did. Don’t despair, you’ll make the home that’s currently affordable for you into your dream home in no time. The state of the 2023 real estate market is not your opportunity for trying to keep up with The Joneses.
We have no idea what might happen with real estate or anything for that matter. Keep your blinders on and focused on what’s important to you. The last few years have proven to be unimaginable in so many different respects. What I know for sure, is once you decide something, do it and do it now. We never know how long we have or what the country is going to experience that could affect our destiny even more. In all actuality, real estate changes with the times, the same as your life!
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