Palo Alto, Calif., Jan. 17, 2023 (GLOBE NEWSWIRE) — While there is no clear consensus about what will happen to mortgage rates and home sales in 2023, the real estate experts from organizations like the Mortgage Bankers Association, Zillow, Taylor Morrison, and others surveyed in Point’s 2023 Real Estate Expert Survey agree 2023 will likely bring less volatility to the real estate market. But any improvement will be slow.
Point asked experts about where mortgage rates will land this year; what will happen to existing-home sales; and what advice they would give home buyers and sellers.
Key findings include:
- About three-quarters of the respondents expect the average 30-year fixed mortgage rate to stay below 7% in June 2023. By December, every respondent believes rates will be at or below 7%.
- Nearly all the experts believe existing-home sales will fall in 2023 compared to 2022, but about one-third believe they will decrease by 9% or less.
- Experts expect home values to drop by a median 5% during the year.
- Nearly half of the experts pointed to the Fed’s decisions on interest rates as the factor with the most significant impact on the housing market.
- HELOC volume is likely to increase in 2023, said about three-quarters of respondents.
What do higher mortgage rates mean for the housing market in 2023?
- Higher rates will bring low sales volume (which is already in effect now). That will only increase again gradually as asking prices are lowered, first by those with an urgency to sell due to factors like divorce, death, or bankruptcy, and later by sellers informed by comps that reflect the former’s influence. — Issi Romem, Economist & Founder of MetroSight; Fellow at Terner Center for Housing Innovation
- If mortgage rates increase, the chilly housing market will get even colder. People still need homes, but anyone who can wait to make a move will be more likely to do so. — Stephanie Reid-Simons, Senior Vice President, News, at RealEstateNews.com
- Higher mortgage rates will impact inventory levels negatively. Many owners will be unable or unwilling to sell because they have a mortgage rate lock-in, meaning they can’t list their home and shoulder a higher mortgage rate on a new purchase.
- So they’ll just sit tight in their current home. (This will help renovation volume but hurt home sales.) — Spencer Rascoff, General Partner at 75 & Sunny Ventures; co-founder of Pacaso and Zillow
What guidance would you give consumers in regards to the housing market in 2023?
- When buying, buy for the long haul. Yes, interest rates are up. But so are rents. Yes, home prices are expected to be soft; so are stocks. A “fast” track to build wealth is not as clear as it was when rates were at their lowest and home price appreciation stunningly aggressive. And so that makes home buying into what it was long considered to be: a path to slow and steady wealth building, a way to pay yourself the landlord’s take, and to run your own house/kingdom as you choose. — Skylar Olsen, Chief Economist at Zillow
- Rates are expected to move lower for the year, and home price growth is expected to cool, both of which will help affordability challenges. But inventory remains tight, which will put a floor on how far home prices can fall. However, some previously “hot” markets will see more drastic price declines than others, and we have started to see signs of that in the Q3 2022 home price data. — Mike Fratantoni, Chief Economist at the Mortgage Bankers Association
- If you can, wait to make a move until the Fed clearly signals that they’re going to stop raising rates. — Eoin Matthews, Chief Business Officer and Co-founder at Point
Are there specific real estate markets you expect to outperform in 2023?
- In the current market environment, rather than markets that outperform, it may be better to think about stable markets. The good news is that it’s unlikely we will see a repeat of the blockbuster price appreciation witnessed in some markets, especially in the South and West, in 2021 and early 2022. Many cities in these regions benefited from an influx of new residents who ditched the big cities and embraced remote work. Some are now seeing home prices fall as the market softens. With higher mortgage rates, affordability will continue to drive home-buying decisions. Cities, especially in the lower-cost areas of the country, including many in the Midwest, are likely to see fewer wild swings in home prices, making the homeowning experience more stable and not as exhilarating for sellers or as scary for buyers. — Paul Bishop, Vice President, Research and Economist at T3 Sixty
- Big coastal markets will rebound quickest as return-to-office gets into full swing AND because those markets corrected first (they boom early and bust early). — Eoin Matthews, Chief Business Officer and Co-founder at Point
The experts who responded are:
- Carey Armstrong, Co-founder and COO at Tomo
- Paul Bishop, Vice President, Research and Economist at T3 Sixty
- Mike Fratantoni, Chief Economist at the Mortgage Bankers Association
- Eoin Matthews, Chief Business Officer and Co-founder at Point
- Skylar Olsen, Chief Economist at Zillow
- Sheryl Palmer, Chairman and CEO at Taylor Morrison
- Emily Paquette, CEO of Inman News
- Spencer Rascoff, General Partner at 75 & Sunny Ventures; co-founder of Pacaso and Zillow
- Stephanie Reid-Simons, Senior Vice President, News, at RealEstateNews.com
- Issi Romem, Economist & Founder of MetroSight; Fellow at Terner Center for Housing Innovation
- Seth Sprague, Director of Consulting Services at Richey May.
Source: finance.yahoo
