Palo Alto, Calif., Jan. 17, 2023 (GLOBE NEWSWIRE) — While there’s no clear consensus on what will happen to mortgage rates and home sales in 2023, real estate experts at organizations like the Mortgage Bankers Association , Zillow, Taylor Morrison and other respondents to Point’s 2023 Real Estate Expert Survey agree that 2023 will likely bring less volatility to the housing market. But any improvement will be slow.
Point asked experts where mortgage rates will land this year; what will happen to existing home sales; and what advice they would give to home buyers and sellers.
Key findings include:
- About three-quarters of those surveyed expect the average 30-year fixed mortgage rate to remain below 7% by June 2023. By December, all respondents believe rates will be at or below 7%.
- Almost all experts believe that existing home sales will fall in 2023 compared to 2022, but about a third believe they will decline by 9% or less.
- Experts expect home values to fall by an average 5% over the year.
- Almost half of the experts pointed to the Fed’s decisions on interest rates as the factor with the greatest impact on the housing market.
- HELOC volume is likely to increase in 2023, said roughly three-quarters of respondents.
What do higher mortgage rates mean for the housing market in 2023?
- Higher rates will bring low sales volume (which is already in effect now). That will only gradually rise again as asking prices fall, first by those in an urgency to sell due to factors like divorce, death or bankruptcy, and then by comp-informed sellers who reflect the influence of the former. — Issi Romem, economist and founder of MetroSight; Fellow at Terner Center for Housing Innovation
- If mortgage rates rise, the cold housing market will cool even more. People still need houses, but anyone who can wait to make a move is more likely to. — Stephanie Reid-Simons, SVP of News at RealEstateNews.com
- Higher mortgage rates will have a negative impact on inventory levels. Many homeowners won’t or can’t sell because they have a fixed mortgage rate, which means they can’t put their home up for sale and take a higher mortgage rate on a new purchase. So they will just stay put in their current home. (This will help renovation volume, but hurt home sales.) Spencer Rascoff, general partner of 75 & Sunny Ventures; co-founder of Pacaso and Zillow
What guidance would you give consumers regarding the housing market in 2023?
- When buying, buy for the long term. Yes, interest rates have gone up. But so are rents. Yes, house prices are expected to be low; so are actions. A “fast” track to wealth isn’t as clear cut as it was when rates were at their lowest and home price appreciation was staggeringly aggressive. And that makes buying a home what it was long considered to be: a path to the slow and steady accumulation of wealth, a way to pay yourself the owner’s share and manage your own home/kingdom. as you choose. — Skylar Olsen, chief economist at Zillow
- Rates are expected to decline during the year and home price growth is expected to cool, adding to affordability challenges. But inventory remains tight, which will cap the fall in home prices. However, some previously “hot” markets will see sharper price declines than others, and we’ve started to see signs of that in Q3 2022 home price data. — Mike Fratantoni, Chief Economist at the Mortgage Bankers Association
- If you can, wait to make a move until the Federal Reserve clearly signals that they will stop raising rates. — Eoin Matthews, Commercial Director and Co-Founder of Point
Are there specific real estate markets that you expect to outperform in 2023?
- In the current market environment, rather than outperforming markets, it may be better to think of stable markets. The good news is that we are unlikely to see a repeat of the blockbuster price appreciation seen in some markets, especially in the South and West, in 2021 and early 2022. Many cities in these regions benefited from an influx of new residents leaving big cities and embracing remote work. Some are now seeing home prices fall as the market weakens. With higher mortgage rates, affordability will continue to drive home buying decisions. Cities, especially in lower-cost areas of the country, including many in the Midwest, are likely to see fewer wild swings in home prices, making the homeownership experience more stable and not as exciting. for sellers nor so scary for buyers. — Paul Bishop, vice president, researcher and economist at T3 Sixty
- The large coastal markets will recover faster as the return to office is in full swing AND because those markets corrected first (they rise early and break early). — Eoin Matthews, Commercial Director and Co-Founder of Point
The experts who responded are:
- Carey Armstrong, Co-Founder and COO of Tomo
- Paul Bishop, vice president, researcher and economist at T3 Sixty
- Mike Fratantoni, Chief Economist at the Mortgage Bankers Association
- Eoin Matthews, Commercial Director and Co-Founder of Point
- Skylar Olsen, chief economist at Zillow
- Sheryl Palmer, President and CEO of Taylor Morrison
- Emily Paquette, CEO of Inman News
- Spencer Rascoff, general partner of 75 & Sunny Ventures; co-founder of Pacaso and Zillow
- Stephanie Reid-Simons, SVP of News at RealEstateNews.com
- Issi Romem, economist and founder of MetroSight; Fellow at Terner Center for Housing Innovation
- Seth Sprague, director of consulting services at Richey May
About the point
Point is a home equity platform that makes home wealth more valuable for everyone. With a Home Equity Investment (HEI) from Point, homeowners can unlock the equity in their home, allowing them to eliminate debt, overcome periods of financial hardship, and diversify their wealth. For investors, Point provides access to a previously untapped asset class in the residential real estate space. Founded in 2015 by Eddie Lim, Eoin Matthews and Alex Rampell, Point is backed by major investors including Westcap, Andreessen Horowitz, Ribbit Capital, Greylock Partners, Bloomberg Beta, Redwood Trust, Atalaya Capital Management, Kingsbridge Wealth Management, Deer Park Road Management, The Palisades Group, Alpaca VC and Prudential. To date, Point has raised more than $170 million in equity capital. The company is headquartered in Palo Alto, CA. For more information, visit www.point.com.