2023: The Year of the Homebuyer? Our Bold Predictions on Home Prices, Mortgage Rates, and More

It’s safe to say we’ve never encountered a housing market nearly as unpredictable as the one we’re in right now. After months of navigating wild fluctuations, homebuyers, sellers, owners, and renters are now desperately trying to read the tea leaves to figure out where real estate prices, inventories, sales, and mortgage rates are going in the coming year.

And just in time, Realtor.com® is here to help them all figure it out with our annual housing forecast.

The bottom line: Homebuyers and renters hoping for some financial relief in 2023 will likely be disappointed. But they won’t get whiplash either. The dramatic swings and wild gyrations in the housing market are expected to taper off as the real estate ecosystem continues to slow.

While the Realtor.com 2023 forecast anticipates home and rental prices will keep climbing next year, the increases will be much more modest than the huge surges seen earlier this year. Mortgage interest rates, which have become the bane of many first-time and other buyers who can’t pay all in cash, will remain high. But they aren’t expected to substantially rise again.

Sales are expected to continue falling as buyers simply can’t afford the onerous combination of towering home prices and high mortgage rates. Home and rental prices have been falling from their peaks over the summer, but they’re still rising year over year.

“It’s going to be a tough year for homebuyers, home sellers, and the overall housing market,” says Realtor.com Chief Economist Danielle Hale. But “we’re going to take some steps toward a better balance between buyers and sellers.”

One bright spot for buyers will be the number of homes for sale, which has been hovering near crisis level and is finally expected to rise. But will that be enough to bring buyers back into the market?

This is what homebuyers, home sellers, and renters can expect in the new year.

Source: Realtor.com

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Mortgage Rates Dip Slightly to 6.66%, but Have Doubled From a Year Ago

The numbers: Mortgage rates took a breather from its march towards 7% this week, as the economic outlook looks uncertain.

The 30-year fixed-rate mortgage averaged 6.66% as of Oct. 6, according to data released by Freddie Mac on Thursday.

That’s down 4 basis points from the previous week—one basis point is equal to one hundredth of a percentage point, or 1% of 1%.

Last week, the 30-year was at 6.7%.

It’s worth noting that Mortgage News Daily, which follows day-to-day movement in mortgage rates, is noting that the 30-year is at 6.95%.

Though rates have come down as per Freddie Mac — albeit ever so slightly — overall, mortgage rates are still high relative to where they were a year ago.

‘Rates remain quite high compared to just one year ago, meaning housing continues to be expensive for potential home buyers.’

Sam Khater, chief economist at Freddie Mac

Last year, the 30-year was averaging at 2.99%.

“Rates remain quite high compared to just one year ago,” Sam Khater, chief economist at Freddie Mac, said in a statement, “meaning housing continues to be expensive for potential home buyers.”

This October, the average rate on the 15-year mortgage also dropped slightly to 5.9%.

The adjustable-rate mortgage, or ARM, averaged 5.36%, up from the prior week. Interest in ARMs is rising, with the share of ARMs as a percentage of all mortgage applications for purchases of a home rising to 12%, the Mortgage Bankers Association said. That’s the highest level it’s reached since 2008.

Overall, mortgage applications fell significantly in the latest week, as buyers pulled back amid higher rates, and also due to the hurricane-induced closures in Florida.

The yield on the 10-year Treasury note rose to 3.8% in morning trading on Thursday.

Source: Realtor.com

Mortgage Rates Rise for Fifth Week in a Row, Hitting 6.29%

By Charley Grant
Sep 22, 2022

Mortgage rates rose for the fifth consecutive week, reaching yet again the highest level since the financial crisis.

The average rate on a 30-year fixed mortgage climbed to 6.29%, according to a survey of lenders released Thursday by Freddie Mac. It was the second week in a row that rates topped 6%. The last time rates were this high was October 2008, when the U.S. was deep in recession.

The sharp rise is another product of the Federal Reserve’s campaign to curb decades-high inflation. On Wednesday, the central bank raised interest rates for the fifth time this year. Officials indicated that more large increases are on the way even if such moves risk a recession.

A year ago, mortgage rates were 2.88%.

Higher rates affect virtually every corner of the economy, but their effect on housing is particularly acute since higher rates can easily add hundreds of dollars to a buyer’s monthly mortgage payments.

Take a borrower who buys a $500,000 house with a 20% down payment. With a 2.88% mortgage, that person can expect to pay about $200,000 in interest over 30 years for their $400,000 loan, according to a mortgage calculator by Bankrate.com. With a 6.29% mortgage, the borrower could pay more than $490,000 in interest.

Higher rates have cooled housing significantly. Though home prices continue to notch year-over-year gains, prices are falling month-over-month. Many would-be buyers are getting priced out of homeownership. Many homeowners feel stuck in place, since selling would mean taking on a mortgage with a significantly higher rate.

The national median mortgage payment was $1,839 in August, up 33% from the start of the year, the Mortgage Bankers Association said Thursday.

Mortgage rates don’t move automatically when the Fed raises its rate. They typically rise or fall in tandem with the benchmark 10-year Treasury yield, but that yield is heavily influenced by expectations for Fed rates. The 10-year yield this week hit its highest level since 2011.

Source: Realtor.com

US Housing Prices Fall for First Time Since 2012

• Pandemic frenzy is hitting the skids as mortgage rates climb

• Index of 20 cities posts first monthly decline since 2012
  
  Say goodbye to the housing bull run. US home prices -- for the first time in a decade -- are falling.
  
  A national measure of prices in 20 large cities fell 0.44% in July, the first drop since March 2012, the S&P CoreLogic Case-Shiller index showed Tuesday. The last real estate crash ended in 2012, ushering in 10 years of price gains, capped off by the two-year pandemic buying frenzy.
  
  But the Federal Reserve has put a swift end to the party as it fights to curb inflation. Mortgage rates this year doubled, pricing out many buyers and causing sales to plunge. Now values are heading south. The biggest month-over-month declines in July were in San Francisco (-3.6%), Seattle (-2.5%) and San Diego (-2%).
  
  “The cooling has come hard and fast,” Stephen Stanley, chief economist at Amherst Pierpoint, said in a note.

To be sure, prices remain high. The Case-Shiller national index jumped 15.8% year-over-year in July. But that was the smallest gain since April 2021, and the slowdown from the 18.1% jump in June was the largest deceleration in the history of the index.

There are also signs that there is plenty of pent-up demand for housing. US sales of new homes surged unexpectedly in August, government data showed Tuesday.

It was the strongest pace of new-home sales since March, perhaps reflecting a race by buyers to beat further increases in borrowing costs and take advantage of price cuts by some builders. New-home sales rose in all regions, including a 29.4% jump in the South, where the pace was the firmest this year.

The declines in home prices have been steepest in the most unaffordable locations, especially on the West Coast, where buyers were already strained early this year when rates were still near historic lows.

The falloff looks extreme compared with the two-year pandemic frenzy, marked by multiple offers and a shortage of listings that drove buyers to bid high.

Now listings are lingering longer because demand has collapsed, adding to the active inventory. One thing may help to keep prices elevated: fewer homes are coming on the market.

Homeowners who don’t have to move are staying put. Buying a house for most requires giving up a cheaper mortgage. A recent report from Zillow Group Inc. showing that new listings slid almost 23% in August from a year earlier.

Meanwhile, the Federal Reserve continues to move interest rates upward, Lazzara said.

“Given the prospects for a more challenging macroeconomic environment, home prices may well continue to decelerate,” he said.

— With assistance by Chris Anstey, and Vince Golle

September 27, 2022 at 6:00 AM PDTUpdated onSeptember 27, 2022 at 8:02 AM PDT
By

Prashant Gopal

Source: Bloomberg.com

Rodolfo Campos and Diego Corona Affordable Homeownership Interns 2019 .

What interested you most about an Internship at Capital Direct Funding?

Rodolfo Campos:

Taking on challenges is something that I have embraced my entire life, no matter how difficult the situation may be, as a result, I decided to attend UC Berkeley. My immediate post-graduation goal is to help underrepresented communities, especially East LA, by supplying family’s and students with the necessary resources to successfully embark on their journey. I firmly believe that sharing knowledge, experiences, and skills are essential for us to grow as a community. This internship is giving me the critical thinking abilities necessary to carry out my goal, as well as helping me quench my insatiable desire to learn more about financial literacy, investments, and savings. Capital Direct Funding is helping me build my future brick by brick.

Diego Corona:

As I transitioned from high school to college, my passion for financial literacy grew and so did my efforts to try to assist the underdeveloped and low-income communities. As a first-generation Latino, I witnessed family and friends be affected by housing and financial crises and I made it my goal to help these families stabilize their future. After completing my freshman year at UC Berkeley, I wanted to learn more about Real Estate and investments to further understand how the markets work and eventually gain enough knowledge to assist the families in need. As an intern at Capital Direct Funding, I was able to work alongside a sharp group of individuals who cared for the well being of the community and I was able to expand my apprehension of the housing market as I learned more about real estate investments and loan programs.

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Give us one take away from your experience working at Capital Direct Funding?

Rodolfo Campos:

My greatest takeaway was financial literacy. Although one may learn some of it in college, it is different to experience it and see it applied in a professional setting.

Diego Corona:

I really enjoyed having conversations with Frank, Sandra, Francisco and the entire staff at Capital Direct Funding. Their perspectives and professionalism really helped me become more curious in financial services and has contributed to the growth of my passions.

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What are some of your hobbies?

Rodolfo Campos:

As a Los Angeles Marathon two-time finisher, I have avidly enjoyed running since I was 12. However, other interests lie in playing guitar, drawing, basketball, and lifting weights.

Diego Corona:

As a musician with Mariachi Vilazul, I enjoy playing the trumpet and performing for festivities. I also enjoy playing basketball and having insightful conversations with my peers and coworkers.

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Who is your Inspiration?

Rodolfo Campos:

Talking to my parents gave me a window into their life beyond their listless fatigue that seemed to follow them the moment they enter the door, eyes dry and bloodshot, yet the moment they meet mine, I am happily met with a smile. Tough hands and rugged feet are the norm, and as a result of witnessing their hard work, they became my inspiration to be better. I can never repay my parents’ sacrifices with material possessions, but rather by demonstrating that their hard work bore fruit and making something of my life.

Diego Corona:

My parents and family are my biggest inspiration. All their sacrifice and experiences have helped shape me into who I am today, and it is my goal to repay them by taking advantage of any opportunity offered to me and by becoming the best version of myself that I can be.

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What skills did you develop?

Rodolfo Campos:

I am learning how to think ahead. Although focusing on the present is important, it is also important to think of what your next step will be, and how it will benefit the cause you are trying to create. Furthermore, I have developed managerial and budgeting skills that are both basic and important tools in life.

Diego Corona:

During my internship I further developed my ability to think out of the box by sitting in with conversations with Frank, Sandra, and Francisco.

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What app can you not live without and why?

Rodolfo Campos:

I cannot live without Reddit, it’s my main source for news, answers, and memes.

Diego Corona:

I can’t live without Google because it’s the gateway for answers and creates a new path for questions to be asked.

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What Character trait do you want to be known for?

Rodolfo Campos:

Grit is all I can ever refer myself to. From working hard and getting into Berkeley, to receiving scholarships to attend, to completing the LA Marathon. It was not easy, but everything that is worth doing will never be. Although adversity can be crushing, you will become a better person in the end.

Diego Corona:

I want to be known for my strong work ethic, dedication, and for delivering the best results to the best of my abilities.

Want to Grow? Join me March 14th!! NAHREP LA San Gabriel Valley Event. Real Estate, Build Your Future.

Sandra Williams is President and Co-Founder of Capital Direct Funding in West Covina, California and now Marketing Director for NAHREP San Gabriel Valley. She has been a supporter of NAHREP ever since Frank Williams, Co-Founder and Director of Divisional Sales & Operations at Capital Direct Funding, in 2015.

As true Agents of Change, Sandra works side by side with Angel Virgen, a Representative of Skyline Security 10X. They both showcase the Values what NAHREP San Gabriel Valley Chapter has to offer. On March 14th, there will be several Elite Panelists speaking on opportunities they obtained with strategic viewpoints and will share their knowledge to give you a edge on the Future of Real Estate!

“An investment in knowledge pays the best interest. There are no secrets to success. It is the result of hard work, preparation, and learning from those who have already done what you are set out to do” Says Angel Virgen. Investing in yourself is a great direction to set yourself up for a successful 2019! March 14th at The Sheraton Fairplex Conference Center, save the date!