As we continue into fall, the housing market continues to evolve and present both challenges and opportunities for buyers and sellers. Let’s dive in and see what’s currently happening in the world of real estate!
Mortgage rates hit their highest in more than 20 years
Homebuyers have lost a significant amount of purchasing power since the start of the year. Mortgage rates have risen from around 6.5% in October 2022 to nearly 8% this October 2023. Along with this, the typical U.S. home sold for $371,000 last month which is up 3% from last year.
Why are mortgage rates rising again? There are many factors but a main contribution is that there simply aren’t enough homes for sale. The high costs of housing is pushing demand down. Inventory is falling as buyers have already lost a significant amount of purchasing power since the start of the year, as mortgage rates doubled throughout 2022. Redfin Economic Research Lead, Chen Zhao states,
“The Fed hinted that another interest-rate hike before the end of the year is likely, the latest job market data came in stronger than expected, and the yield curve is steepening as investors prepare for higher rates for longer. Turmoil in Congress isn’t helping, either, as the clash among House Republicans stemming from the narrowly missed government shutdown is causing volatility in stock and bond markets. ”
ADU’s Are Packing A Punch
Accessory dwelling units or ADU’s are growing in popularity especially in the West Coast metro areas as homeowners seek ways to lower their housing costs by renting out these units. With the shortage of housing and high home prices, ADU’s are proving to be a quick way to increase the housing supply
Along with renting out these units, homeowners utilize these spaces for hosting out-of-town visitors, a home office space, or other personal uses. Daniel Faina, chief marketing officer at California builder Williams Homes noted that,
“For some buyers it’s really becoming a strategy, how to afford the home they want or maybe a little more home than they otherwise would have gotten,”
Experts Project Home Prices Will Net Positive this Year
If you’re worried about home prices falling this year, let the experts reassure you. The general consensus from industry experts is that home price appreciation will actually be positive for 2023. According to the average of the latest 2023 year-end forecasts from six different organizations; AEI, Fanny Mae, Zillow, HPES, MBA, and NAR, the expectation is that prices will net somewhere around 3.3% positive growth for the year.
Sources: Redfin.com, Realtor.com®, and Keeping Current Matters®