As summer 2023 approaches, you may expect the housing market to heat up as well, but that may not be the case this year. Varying economic factors are contributing to what we are seeing in the real estate market today. Before you hire your realtor, we are here to share with you our predictions on housing trends to watch out for this summer 2023.
Taking the plunge and heading to the closing table can feel scary in an uncertain market. Learn your options on how you can sell your home fast this season so you can enter the housing market with confidence.
2023 so far
To fully understand where we are headed in terms of the real estate sphere, it’s important to take a look back at what we have seen in 2023 so far. The national average 30-year fixed mortgage rate increased 18 points in the month of May (the Federal Reserves attempt to combat raging inflation).
At the same time, sales of previously owned homes have been lacking in 2023 with a 23.2-percent downturn since this same time last year.
Knowing where we are now will help make the expert predictions for this summer clearer. Mortgage rates and lower sales overall certainly will have an impact on future home values, buyer competition, house inventory, and house affordability. Let’s unpack it.
Housing Trend to Watch Out for In Summer, 2023
There Will Be Decrease in the Number of Buyers
In the upcoming summer of 2023, the housing market is expected to witness a significant decrease in the number of potential buyers. Concerns arise as the Federal Reserve intensifies its efforts to combat inflation by raising rates.
As a result, many prospective buyers are feeling apprehensive and opting to stay put in their current living situations instead of exploring new real estate opportunities. With rates on the rise once again, the majority of buyers, who heavily rely on mortgages, are being deterred from entering the market. This shift in buyer behavior is set to shape the dynamics of the housing market during the summer season.
Sellers Will Have to Put In More Effort
As we delve into the summer of 2023, sellers in the housing market will likely face a new reality that demands heightened effort on their part.
Unlike the favorable conditions experienced in the scorching market of 2021, where properties sold swiftly above asking price with minimal seller input, the current landscape necessitates a proactive approach.
To ensure a successful sale at optimal value, sellers now need to prioritize investing in effective marketing strategies and home improvements. Gone are the days when sellers could rely solely on the sheer demand of eager buyers, neglecting property updates and marketing endeavors.
With a reduced pool of buyers in the current market, those looking to sell their homes must recognize the need to elevate their properties and employ marketing tactics that showcase their homes’ unique features and benefits.
A Path to Normalcy
As we embark on the summer of 2023, the housing market is poised to regain a sense of normalcy, as experts have long anticipated. Encouraging signs indicate that the Federal Reserve is set to ease the pace of the recent hike in rate, with Jerome Powell expressing the intention to lower rates as soon as it is deemed appropriate.
This impending development holds the potential to bring about positive changes in the market dynamics. With more modest rate adjustments, an influx of buyers is expected to reenter the scene, while simultaneously enticing an increased number of sellers to list their homes.
Buyers Will Gain Negotiating Power
A notable shift is occurring in the summer of 2023, as buyers find themselves wielding newfound negotiating power in the housing market. The intense bidding wars that once prevailed have gradually faded away, providing buyers with the advantage of favorable terms during the purchasing process.
Although rates experienced a recent surge, there are promising indications that they are stabilizing to more reasonable levels. While some individuals may harbor regret for not capitalizing on the exceptionally attractive rates as low as 3% offered during the pandemic, it is important to note that rates around 7% have been observed in healthy market conditions.
A Housing Market Crash Won’t Happen
Experts in the field concur that the housing market is not heading towards a crash, offering a more optimistic outlook. While a slowdown is projected, it is expected to be moderate rather than a double-digit decline, particularly when compared to the significant downturn experienced during the Great Recession.
One crucial factor differentiating the present market from the past is the overall financial strength and stability of homeowners. The implementation of more stringent borrowing guidelines in the mortgage industry since the 2008 housing crisis has contributed to homeowners being better equipped to maintain their properties.
The majority of borrowers who secured rates below 5% and met necessary approval criteria are unlikely to face foreclosure, presenting a stark contrast to the challenges faced 15 years ago.
Furthermore, builders have learned valuable lessons from the recession, leading them to exercise caution in the pace of construction. This prudent approach aids in achieving a balance between supply and demand, mitigating the risk of oversupply.
While the exact state of the housing market by the end of summer 2023 remains uncertain, indications point towards a buyer’s market on the horizon. This is promising news for those planning to purchase a home in the coming months.
However, for sellers, it is important to manage expectations. Bidding wars and exorbitant sale prices, along with minimal preparations for listing, are likely to become less prevalent in the current market landscape. Adapting to this shift will be key in navigating the summer housing market effectively.
