What’s Ahead For the Real Estate Market and Interest Rates
Real estate expert Brian Buffini just gave his 2023 Mid-Year “Bold Predictions” talking about where the real estate market is and where it is heading. Not only has he been in the industry about as long as I’ve been alive, but he also gains insights from experts in mortgage and finance fields to give a holistic view on the market. The news headlines do whatever it takes to get a click and usually use tactics of fear and insecurity when it comes to news about the housing market. Check out what Buffini explains is actually happening in the market.
First, let’s look at how the 2023 real estate market is different from the 2008 housing crisis and why we are NOT expecting a crash:
• Tighter restrictions on obtaining a mortgage in place.
• Less inventory of available homes now.
• Job growth is still healthy.
• Mortgage delinquencies are still low, only rising 0.4% from 3.0% in 2022 to 3.4% in 2023.
In addition to these factors, let’s look at some stats on how much equity people own in their homes.
39% of homes are owned free and clear
29% of homeowners own more than 50% equity of their home
32% of homeowners own less than 50% equity of their home
These stats are not signaling a large number of foreclosures coming - if you have a lot of equity in your home, you’re not going to be foreclosing on it.
Currently, rates are still high (compared to the past couple of years) and inventory is still low. This is the first time in our lifetime that we are seeing people staying in their homes not because they love their current house, but because they love their current rate. It’s a hard pill to swallow to give up a 3% rate for a 7%. However, as we will see below, rates are expected to start lowering and keep lowering over the next few years. When that happens, we are getting ready to see a surge of buyers flood the market and more inventory come to the market.
Let’s let some experts give their predictions for what’s ahead in the next couple years…
“Mortgage rates will drop - with the 30-year fixed mortgage rate progressively falling to 6.0% this year and to 5.6% in 2024.”
- Lawrence Yun, National Association of Realtors Chief Economist
“Or forecast is for a 30-year mortgage rate to be closer to about 5.5% by the end of this year and drop a little lower next year.”
-Michael Fratantoni, Chief Economist and Senior Vice President of Research, Mortage Bankers Association
“The nation is standing on the front doorstep of the largest wave of home-buying demand in US History.”
-Buffini’s Bold Predictions
There are pros and cons to buying now or waiting until rates drop. Give me a call or we can meet for coffee to chat about your situation and benefits to buying and selling at different times of the market.