Predictions for the 2023 housing market

Between soaring interest rates and low inventory of homes, 2022 was one of the most tumultuous years in memory for the central Ohio housing market. Will 2023 continue the upheaval that started during the pandemic, and what surprises does the new year have in store? Here are some of our predictions for the housing market in 2023.

A correction for home prices

Home prices soared in the pandemic years, pricing many families out of the market entirely. Rate hikes from the Federal Reserve in 2022 led to increased mortgage rates, cooling the once white-hot market. According to Yahoo Finance, average home prices began to fall in November of 2022, with experts predicting another 10% to 15% drop by the second or third quarter of this year. This could be good news for would-be homebuyers who were waiting for the market to calm down. For existing homeowners, this market correction could mean a significant drop in property value.

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Unpredictable mortgage rates

Mortgage rates rose sharply through 2022 but began to pull back slightly toward the end of the year. Some experts believe that mortgage rates will remain relatively high through 2023 but stabilize somewhere near 5-6%. Others believe that further rate hikes and high inflation could see rates approaching 8.5% in the new year. Will the downward trend hold, or will mortgage rates reach their highest peak in more than a decade? Only time will tell.

Continued Inventory Woes

Low inventory of homes for sale has contributed to rising home prices across the country. This is especially true in central Ohio, which is one of the region’s fastest growing metro areas. 2023 could see a slight improvement in the stock of available homes, but overall inventory is expected to remain low. According to the National Association of Realtors, the availability of homes on the market could increase by 23% in the new year. This is due in part to a decrease in demand and homes spending more time on the market. On the other hand, would-be buyers eager to make a deal in a landscape of new, lower prices could gobble up inventory as quickly as it’s made available. Even with so many unknowns in the 2023 market, it’s likely that housing in central Ohio will remain competitive.

Return to a buyer’s market?

In recent years, sellers have been holding all the cards in the housing market. In 2023, the era of waived inspections and offers that are tens of thousands over asking price could be at an end. Higher interest rates and continued affordability issues will see a major slowdown in the housing market, and sellers will no longer be fielding dream offers from every angle. Sellers could face an uphill battle thanks to increased mortgage rates and low inventories. Though we may not see a dramatic turn toward a buyer’s market in the new year, the 2023 housing market should at least be more balanced.

Whether you are ready to explore your mortgage options in the new year or simply have questions about the loan process, the mortgage experts at First Ohio are here to help. Contact us today to learn more about the mortgage options that best fit your situation in 2023!