Exploring 2023 Home Price Rise: Market Trends and Impact
Navigating the landscape of home buying or selling can be an emotionally charged experience, filled with anticipation, questions, and yes, a bit of anxiety. This emotional journey is one many can relate to, especially when contemplating the right time to make a move in the real estate market.
If you've been hesitant to take action due to concerns about fluctuating home prices, it's crucial to understand current market trends. Contrary to some fears, home prices are not on a downward trajectory. In fact, national data from multiple reputable sources indicates a consistent upward trend in home prices this year. This is evident in the graph provided below, substantiating the resilience of the housing market.
The key takeaway here is to make decisions based on solid data rather than emotional impulses. Market indicators suggest that now could be a favorable time for real estate activities. So whether you're contemplating purchasing a new home or considering selling your existing one, it's essential to keep yourself informed to make well-grounded decisions. Being well-versed in current market trends empowers you to move forward with a level of comfort and financial confidence.
In the first half of 2022, home prices soared but couldn't maintain that trajectory. By the latter half of the year, we saw a minor dip, which the media amplified, causing consumer worry.
What's New in 2023
The key takeaway for 2023 is balance. Prices are rising again, but at a more moderate pace, indicating a healthier market.
Orphe Divounguy, Senior Economist at Zillow, summarizes:
"After a brief dip from July 2022-January 2023, the housing market has resiliently rebounded in 2023."
Upcoming Trends
As the year progresses, expect slower but still positive growth in home prices. Don't mistake this natural deceleration for a decline; a slower increase is still growth.
Why Are Home Prices Increasing Now?
If you're wondering why home prices are ticking upwards, it's essential to look at the interplay between supply and demand in the real estate market. One core factor is the limited number of available homes compared to the growing number of interested buyers.
Higher mortgage rates have a dual impact on the market. While they may cause some prospective buyers to think twice, they also make existing homeowners more hesitant to sell. This phenomenon is known as the "mortgage rate lock-in effect." In essence, homeowners are wary of giving up their current low-interest mortgage rates to risk higher rates on a new property.
This unique situation creates a ripple effect on the housing market's supply and demand dynamics. Despite the moderating effect of higher mortgage rates on buyer interest, the reduction in available homes has been more significant. Consequently, home prices have continued their upward trajectory.
Freddie Mac puts it succinctly: "While rising interest rates have reduced affordability—and therefore demand—they have also reduced supply through the mortgage rate lock-in effect. Overall, it appears the reduction in supply has outweighed the decrease in demand, thus house prices have started to increase."
So, if you're looking to make sense of the current real estate landscape, keeping an eye on mortgage rates and their impact on both buyers and sellers can offer valuable insights
Here’s How This Impacts You
Buyers: If you've been waiting to buy a home because you were afraid its value might drop, knowing that home prices have gone back up should make you feel better. Buying a home gives you a chance to own something that usually becomes more valuable over time.
Sellers: If you've been holding off on selling your house because you were worried about how changing home prices would impact its value, it could be a smart move to work with a real estate agent and put your house on the market. You don't have to wait any longer because the most recent data indicates home prices have turned in your favor.
Bottom Line
If you put off moving because you were worried that home prices might go down, data shows they’re increasingacross the country. Let’s connect so you can understand how home prices are changing in our local area.
