On the House: Is 2023 the Year To Finally Buy a Home?
Q: Is 2023 the year to finally buy a home?
It depends. There are some signs that buying a home may be getting easier for many people. Inventory levels are still low, but more homes are coming on the market; bidding wars and incredible offers over asking prices have subsided; and buyers can once again insist on inspections, contingencies and repairs before the deal closes.
Homes are staying on the market longer, so buyers can sleep on them rather than submitting offers at open houses. prices in December were even down more than 10% from their summer peak.
While this is welcome news for most first-time homebuyers, REALTORS® economists expect home prices to rise 5.4% year-over-year in 2023. (That’s on top of some already high prices.) And mortgage rates remain uncomfortably high, at last count around 6% for a 30-year fixed-rate loan.
Even as home prices have fallen, these higher rates have inflated monthly mortgage payments significantly. These monthly housing bills are now about two-thirds larger than they were a year ago. * These payments are 92 percent more than they were two years ago. In other words, today’s buyers who take out a mortgage will be paying about twice as much for the same home in 2020.
Despite these daunting financial hurdles, I am impressed by the perseverance of many first-time homebuyers for whom homeownership has less to do with market conditions and more to do with their personal needs.
I’m meeting with colleagues these days to find inspiration for this column. (You can help this writer by sending questions to OnTheHouse@realtor).
“It’s pretty simple,” said a fellow writer.” Is 2023 the year to buy a house?”
Then the new mom revealed that she and her husband are considering starting their own home search on the West Coast this year.
She is one of four people on an editorial team of 10 people who are either actively looking or just starting to look for their first home. These individuals write and edit stories and videos about the housing market with a full understanding of the financial challenges that lie ahead of them. They are also scattered across the country in some of the most expensive real estate markets. New York City, California’s San Francisco Bay Area and Denver. And they are all at different stages of their lives.
A colleague is looking for a duplex or triplex outside Denver where he and his partner can live in one unit and rent out the others to help pay their mortgage. My own editor and his wife, parents of two children, have been looking for a home in the New York City suburbs for more than a year. I also learned that another colleague was looking to trade his and his wife’s apartment in Silicon Valley for their house in the northern Bay Area.
They wanted to raise a family, build equity, and get away from a landlord who was raising the rent every year. These desires are not as volatile as mortgage rates.
Buying a home is a deeply personal decision. Of course, you need to be able to find a home you want to live in, have enough money in the bank to pay for it, and enough left over for maintenance and emergencies, and then have your offer accepted. And this is not an easy process.
But many first-time homebuyers are ready for it. They’ve saved diligently over the past few years, cleaned up their credit, gotten pre-approved for a mortgage, and familiarized themselves with the area they hope to eventually settle in. They may have to make sacrifices and compromises. Perhaps they will move farther away, buy an older or smaller home than they planned, or even purchase a home that needs more work than they expected. They’ll negotiate with sellers for money-saving deals, shop around for mortgages that offer lower rates, and find ways to make it work financially.
They are determined to make this happen. So for them, 2023 will be the year to buy a home.