2023 Mortgage Forecast
/Hello and happy new year! Today Carter Campbell with Houzd Mortgage is going to discuss his 2023 mortgage market forecast. Later this month I will have a real estate forecast for the year as well.
The 2023 housing market is beginning to shape up, and we believe there is optimism on the horizon. We are predicting a much better market than what we experienced in 2022.
In the last month or so we’ve seen interest rates finally showing signs of meaningful improvement. We think both of these trends will continue into this year.
It’s no secret interest rates are driven by inflation. As inflation rose throughout 2022, so did interest rates. Towards the end of the year, we got some much-needed relief. We believe inflation hit its peak and finally began to decline, as prices came down across the board for food, gas, clothing, etc. In turn, we saw interest rates begin to come down as well.
We predict we will continue to see lower monthly inflation readings heading into 2023, which means we will continue to see interest rates decline. Providing an opportunity for those who purchased with a higher rate to refinance their loan.
Now unfortunately it appears we are headed for a recession.
Many people want to draw the conclusion that this must mean we are also in a housing crash, but this is hardly the case. Home prices went up 115% in the last ten years. Since 2020 they have gone up 39%, even with interest rates at 7%. We’ve seen home prices drop some and inventory is still very light. Recessions aren’t all bad as rates historically go down in a recession.
Supply and demand will continue to play a role in the housing market, as demand is greatly impacted by interest rates. This last year as we saw interest rates peak over 7% and many who would have purchased went into hibernation to wait for rates to come down. As interest rates continue to decline, in the months ahead we predict an influx of buyers to come out of hibernation – in turn increasing the demand for housing.
However, supply is still forecasted to remain low. Builders are being much more cautious these days having learned their lesson in 2006-2009.
If we are right and inflation and interest rates go down AND we hit a recession to drive rates down even further, this next year we could see more of an opportunity to purchase a house with a much lower payment.
If you have any questions about the market or when you should plan to make your move this year, please reach out to me. I’d love to review your situation and help you make the best decisions when it comes to your 2023 real estate and financial goals.