Mid-Year Market Update
The real estate industry is an ever-changing landscape where the future is difficult to predict. Whether you are a potential homebuyer, seller, or investor, staying informed about the latest developments is crucial for making informed decisions. Below are a few of the latest trends in the market as well as some predictions for the rest of the year.
Steady Prices, Declining Sales
Median sale prices for homes in the U.S. have been consistent year-over-year and are currently around $516,000. However, the number of homes sold in April 2023 decreased by around 3.4% compared to April 2022. Low inventory and high interest rates are to blame for declining home sales, but nearly every area in the U.S. has experienced year-over-year declines.
One sign that the market is currently healthy is that properties are spending fewer days on the market month over month. In March 2023, homes were on the market for a median of 54 days. That number dropped to 46 days in April and 43 days in May.
Balanced Market Conditions
The U.S. real estate market is gradually moving towards a more balanced state. While the market has favored sellers for several years, buyers are gaining more leverage in negotiations. The number of new listings has increased in recent months, offering buyers a wider range of options to choose from. Sellers should be prepared to price their properties competitively and consider strategies to make their listings stand out in the increasingly competitive market.
Predictions for Remainder of 2023
Steady Rates and Demand
Since interest rates remain high, it’s unlikely the market will change much in the coming months. The average interest rate for a 30-year mortgage is close to 7%. While many forecasts indicate that interest rates will start to drop soon and may reach close to 5% by the end of 2023, it will take significant movement to impact buyer demand by a substantial amount.
Demand for Affordability
Throughout the rest of 2023, there will be increased demand for affordable housing. The combination of stagnant wages and high living costs means that more buyers will be searching for homes that they can actually afford. However, these properties remain hard to come by.
Work From Home Dynamics
Remote work is still common across the country, meaning buyers will continue searching for large homes that offer ample space. Demand for larger, affordable homes will likely push buyers to purchase in rural and suburban areas. Even though there’s slightly less demand for homes at the moment, home values will likely increase throughout 2023.
The remainder of the year will also see an increased investment in technological advancements. Everything from virtual tours to online document signing is commonplace. However, technology may also help introduce more affordable housing to the market via 3D printing and modular homes.
While there are some promising signs for the current housing market, 2023 will likely be shaped by interest rates. If these rates start to drop, buyer interest might once again rise.