If there’s one way to sum up the housing market over the past few years, the word is unpredictable. From the fierce bidding wars of the pandemic to the subsequent — and unprecedented — rise of interest rates, homebuyers have experienced a multitude of struggles when trying to find, bid on, and purchase homes.
In fact, according to Realtor.com, despite declining monthly sales numbers, the average home price in the Albany, NY, metropolitan area increased 5.6% this year, with a median price of $245,000.
For 2023, there is no evidence to suggest these trends or the unpredictability surrounding them are going to stop. While the next year may bring some (relative) stability to the housing market, any market corrections will not be like those in 2008, and buyers — especially first-time homebuyers — must be willing to negotiate, both with sellers and themselves and their expectations.
At Hudson River Community Credit Union (HRCCU), we offer many programs that can help, including the First-Time Homebuyer Dream Program, which provides up-to $9,500 in grant money to go toward a down payment, as well as traditional mortgage plans that do not require private mortgage insurance.
As HRCCU Assistant Vice President of Marketing Adam Rossi explains, “There are ways to get into a new home without breaking the bank, and HRCCU is committed to doing everything we can to help our members navigate the market and purchase their dream home.”
The continuing upward trends in both prices and mortgage rates will influence buying a home in 2023. Anyone planning to enter the market this year should bear these trends in mind and prepare for them.
Mortgage Rates Will Continue to Rise
As of the middle of December 2022, the average 30-year fixed mortgage rate was 6.6%, more than double the rate at the beginning of 2021, which was 2.65%. Many experts believe that rates will continue to rise in 2023, with some predicting that a 9% interest rate is not out of the question.
More than any other factor in the real estate market, rising interest rates have negatively impacted buyers as well as sellers. For buyers, their money cannot go as far as it did just two years ago, while sellers cannot ask as much for their homes with these rising rates.
Regardless, the U.S. Federal Reserve Bank has renewed its commitment to stifling overall economic inflation by raising interest rates into 2023. While this may have a net benefit in the economy — by all signs, inflation has slowed — it singularly impacts anyone looking to borrow large amounts of money.
Inventory Will Increase, Slowly
One direct benefit of the increase in interest rates is that it stalls some buyers and removes others from the market completely. As a result, inventory has been sitting on the market for much longer in 2022 than in 2021, a trend that will continue into 2023. In the Albany metro area, that median amount of time was 69 days at the end of 2022.
However, it’s important to note that the resulting increase in inventory will be slow. Buyers are understandably cautious right now, but sellers are keen to get the most profit possible out of their homes, especially after seeing their neighbors make huge gains in 2020 and 2021. Although the wild bidding wars of the pandemic are behind us, many sellers who locked in low mortgage rates at that time are happy to stay in their current homes for now, resulting in fewer listings.
It’s also worth noting that the pandemic did not help America’s ongoing new housing shortage. Construction stalled for months, and many home builders continue to experience delays in receiving supplies.
Prices Won’t Crash
There is an old saying, “The best time to buy a house was yesterday; the second-best time to buy is today.” In essence, this means that all real estate prices generally increase over time unless we experience another massive 2007-style bust.
That will also be true in 2023, although the rate of increase will be much slower than during pandemic times. Home prices are anticipated to drop approximately 1.5% throughout 2023.
However, this is a nationwide estimation, which can be deceiving for many stable and thriving markets.
The areas that are most likely to see large price drops are the same ones that saw the largest gains in 2020 and 2021. Namely, the areas where home prices may decline are those areas where people went to “escape” during the pandemic, including cities along the “sun belt” in Florida and Arizona as well as more rural areas, such as Boise, Idaho.
Forecast Is Optimistic for First-Time Homebuyers
First-time homebuyers stood little chance against the fierce competition in 2021.
Within hours of being listed, properties attracted multiple offers, and those who were prepared to pay cash upfront made it very difficult for new buyers to stand out among the sea of applicants.
The housing market in 2022 continued to be less –than ideal for newcomers, to say the least. Despite the fact that experts don’t expect much change in the coming months, first-time buyers are determined to re-enter the market by the spring of 2023.
Wiser after the difficulties they confronted in 2021 and 2022, first-time buyers can take advantage of the programs available to them from institutions such as HRCCU to financially prepare.
By enrolling in HRCCU’s First-Time Homebuyer Dream Program, applicants move one step closer to owning a home. This program helps approved borrowers receive a grant to help cover related expenses, such as a down payment or closing costs.
The process to enroll is straightforward and free — allowing members to remain focused on finding the perfect property.
Buy a Home with Help from HRCCU
Buying a home requires a lot of time, energy, and money. Ensure you have every advantage at your disposal by seeking assistance from the financial experts at HRCCU. Our affordable counseling, products, and other services help members realize their financial goals, whether that is owning a house, financing a small business, or buying a first car.
Explore your financial potential at HRCCU and contact us today to learn more about our offerings.
