Real Estate Market Update: March 2023 

One of the biggest questions on everyone’s mind  is “what will happen with the housing market in 2023?” 

And if you’re considering selling or buying a home this year, you need a rundown of all the back and forth activity we’ve seen. 

As buyers cautiously test the waters, again creating bidding wars in DC, Maryland, and Northern Virginia, the volatility of rates continues to leave some on the fence. Even though the beginning of the year saw a decline in rates and an increase in mortgage applications, rates jumped back up and slowed the trend. 

Now, the Federal Reserve decided to increase interest rates in spite of recent bank collapses, but long-term mortgage rates have decreased. We’re only three months into the year–what does all this spell for the rest of 2023?

Read on to discover what you need to know about the current housing market!

Will Interest Rates Drop in 2023?

After the wild ride of 2022, when mortgage rates more than doubled in response to the inflation and interest rate hikes, early 2023 sparked hope when mortgage rates dropped.  

Unfortunately, the drop did not last. The beginning of March suggested that interest rates would resume their climb, keeping mortgages higher than average. 

Despite the collapse of multiple banks, the Federal Reserve raised interest rates by a quarter of a percentage point, hoping to curb inflation. Inflation does seem to be cooling, but it’s hard to determine whether that will continue. 

Experts predict that interest rates will continue to rise or stabilize, but they don’t expect them to drop significantly anytime soon. 

“Rates for home loans are still caught in a tug-of-war between high inflation and the Federal Reserve’s actions to restrain inflation, which often indirectly pushes long-term mortgage rates higher.” – Forbes.com

In light of the most recent interest rate hike, mortgage rates continued to fall. Long-term mortgage rates are somewhat influenced by inflation and the Fed’s decision on interest, but are primarily affected by the bond market. Per Freddie Mac, mortgage rates dropped to 6.42%, down from 6.60% the week before. 

Market Predictions for 2023

The current mortgage rate drop may inspire potential home buyers. 

The best inspiration to buy is if rates drop and stay at that rate or continue to fall. More buyers will then feel confident enough to jump into the spring housing market. 

Nadia Evangelou, senior economist from National Association of Realtors (NAR) predicts that inflation may slow down and mortgage rates could stabilize below 6% for 2023. As we’ve just seen with the latest news from Freddie Mac, mortgage rates continue to trend downwards.  

If that happens, we could see an uptick in mortgage applications and increased movement of home sales. But even when mortgage rates drop, lack of inventory will push home prices higher. 

Another real estate market factor is today’s buyer. Currently, millennials are the largest group buying homes. 

The average age of a first-time buyer is 33, and there are more 33 year-olds today than in 2008. Add to that the huge discrepancy of available homes on the market: from 4 million in 2008 down to less than 1 million currently, with about 400,000 of those currently under contract. 

How does this affect the market? The largest group of home buyers, out hunting for a home during the lowest point of inventory in history, is a recipe for an even hotter real estate market than originally predicted!

Will the Real Estate Market Crash in 2023?

Even though we’ve heard gloomy predictions from some experts, a real estate market crash is not on the horizon. 

Although mortgage rates are still high, interest rates seem to be evening out and may even taper off. This will help stave off a severe crash like we saw over a decade ago. 

The other factor preventing a housing market crash is low inventory. Many homeowners have low mortgage rates that prevent them from selling and accruing a significantly higher mortgage. As a result, fewer homes are going on the market.

Inventory is also affected by less new construction. After the wave of new builds in 2007 that sat empty when the market crashed, builders are cautious not to repeat that scenario.

Ultimately, conditions are not the same as 2008 to repeat a housing crash of that nature. 

Is it a Good Time to Buy or Sell a Home?

Sellers: if you’ve been waiting for a sign to list your home, this is it! 

Now is an excellent time to sell and take advantage of low inventory and decent affordability for buyers. The stable jobs economy in the DC, Maryland, and Northern Virginia area ensures there are buyers currently waiting on the market. 

But don’t sit on this opportunity! Rates may continue on a steep upward trend (as they are expected to), affordability will go down, and fewer buyers will be ready to pounce. 

If you’re a buyer, you’re no doubt ready for the increased inventory that usually comes with the spring season. Many anxious buyers have been waiting months for spring to arrive, in hopes that their dream home will come on the market. 

With rates fluctuating frequently, there may be pockets of opportunities for serious buyers to jump in with less competition. 

And remember: when rates do eventually drop (whenever that may be), you can always refinance to that lower rate! Savvy home buyers use this strategy to get into the market then save money later. 

Take Advantage of Current Market Strengths

While the real estate market is very different now than it was several years ago, don’t let the high rates and low inventory discourage you if you’re ready to make a move. 

Experts predict that we’re safe from the housing market crash we saw over a decade ago, even with a possible recession. 

And while interest rates likely won’t go as low as they did during the pandemic, buyers and sellers will still benefit with expert real estate leadership.

Reach out today and find out how to navigate the current housing market to make your dream home a reality!