The real estate market is changing again, but homebuyers are starting to exhale with some tempered relief this time. While affordability is still a challenge (nearly 15 million buyers priced out), the ability to ask for seller concessions, longer list times, and decreased interest rates are boosting buyer morale. Here’s what’s happening:
- Mortgage applications rose by 4% in mid-January.
- As of January 2023, the average 30-year fixed mortgage interest rate is 6.33%, while the average 15-year fixed rate is 5.52%.
- Buyers are marginally more confident: Fannie Mae’s Home Purchase Sentiment Index (HPSI) rose by 3.7 points in December 2022 to 61.0.
While experts have varying opinions, most agree that the average 30-year fixed-rate mortgage will decrease to around 5% by the end of the year. However, some experts believe that more rate increases could be in store if inflation doesn’t get under control in 2023. If rates decrease by more points, it will open more doors to buyers compared to the peak rate of 7.12% last year. Each rate decrease means increased affordability and an easier time qualifying for loans. If rates increase, then we will see a market much like 2022’s last quarter.
Due to affordability concerns, many homeowners are still sitting on their homes due to apprehensions about moving. This keeps inventory low in spite of slowly increases due to homes sitting longer on the market. To circumvent this low inventory, buyers can turn to new construction homes to get a dream property without the competition. They may also choose to dive into the bidding wars and put their best offer forward.
Alicia Persson is a real estate content/SEO writer at Marketplace Homes. She has several years of experience working in real estate teams that specialized in investments and property management. Before she joined Marketplace, she was a freelance writer for 7 years, leading to a specialization in real estate and home living content for boutique digital marketing agencies. During her writing years, she learned the basics of SEO and gained experience writing for many different clients, making her highly versatile at creating diverse content.
She is a proud University of Virginia master’s graduate and enjoyed her undergraduate years at the University of Mary Washington. When Alicia is not writing, she plays keytar and sings in a local 90’s rock cover band, or she spends time with her amazing family.