Forecasting the real estate market has proven to be quite challenging over the past few years. No one could have predicted the pandemic and its impact on the cost and availability of real estate. The world has now returned to a mostly normal lifestyle, but the consequences of the pandemic continue to have an effect. How will the future of the Frisco housing market be changed because of these effects? The truth is there continue to be many uncertainties that make it difficult even for the most educated investors to develop solid predictions.
We do know that inflation and interest rates will have a direct impact on the real estate market. These factors, along with others, will directly impact the Frisco housing market. Understanding the potential market changes will help you navigate your way to buying or selling your home in 2023. If you are planning on making a move in 2023, keeping your pulse on the below topics will be beneficial to your successful transaction. Agents like Tina Shaheen will give you vital insight into your local market.
Inflation is affecting everyone
News channels and the internet show almost constant lousy news regarding the current inflation rate. The increase in prices of everyday items at the grocery store, gas pumps, and everything else is impacting people's spending habits. The good news is that the inflation rate will adjust as we continue to catch up from the pandemic's effects. It will be a bumpy road for many people and businesses as we work toward lowering the cost of inflation, including those hoping to get into the Frisco real estate market. The monthly budget of potential buyers has increased by almost 10% in 2022. Until we begin to see these costs normalize, some buyers will be forced to reconsider a purchase of a new home or postpone their plans somewhere in the future.
Rising interest rates will slow buyers
One method the Federal Reserve uses to help curb inflation is adjusting interest rates. In 2022, we have witnessed several increases resulting in mortgage rates of well over 7%. The increase has given pause to many buyers who were previously able to make their money go further when purchasing a home. Managing a monthly payment and the higher cost of goods has become too much. The rising rates will increase the monthly price for buyers. Some buyers will be forced to put home ownership on hold. Others may settle for homes out of their ideal location or one that needs more updates.
This step is necessary for the supply and demand of the market to balance out. We have been in a consistent state of too much demand and too little supply. Increasing the interest rates will squash the dreams of some buyers, but it will allow the market to catch up with the demand.
Home prices will remain consistent
Buyers frustrated by high demand for homes may finally have an opportunity to purchase a new home as some of the competition will be forced out of the market. While there will be more opportunities, they should not expect to pay less for a home. Many experts believe the price of houses will not decline in 2023. Sellers should expect their home value to stay level or increase very slightly. This change is a variation from the trend occurring since the pandemic. The price of houses shot up quickly in almost every market shortly after the pandemic's start. That trend continued into the beginning of 2022.
The prices leveling off is due to the decrease of buyers with the buying power necessary to purchase a new home. As there continue to be buyers who want to buy homes, the prices will not decline in the immediate future. Once these buyers enter back into the market, we will see a more significant increase in home prices, but that will not likely happen until 2024 or beyond.
Sellers should not expect multiple offers
It has been a seller’s market for the past few years. Sellers could capitalize on the lower interest rates and demand for their homes. There was a buying frenzy created due to these circumstances. Sellers frequently received multiple offers well above the asking price. Those desperately trying to buy a home were often put into a bidding war with several other people.
In 2023, the demand for homes will likely decrease as the market adjusts to increases in interest rates and challenges associated with inflation. This is good news for buyers desperately trying to land their next home with little success.
The demand for homes continues
The United States continues to face a housing shortage, and this will not change into 2023. We are experiencing a correction in the market due to potential buyers being pushed out of the market. These buyers continue to want to purchase a new home. As we begin to see relief in the inflation and interest rates, these buyers will likely come back into the table. Will this happen in 2023? Most likely, it will not occur until later in the year or into the first quarter of 2024. Until then, the active demand will decrease despite the desire for buyers to purchase a home.
Tina Shaheen can help you buy or sell Frisco real estate
Interest rates may be higher, sellers may not be entirely in the driver's seat, and home prices may not experience substantial growth next year. Regardless of these factors, people will continue to buy and sell homes. Our lives are full of change, and the timing associated with those changes is not always dependent upon the market. If 2023 is the time to buy or sell your Frisco real estate, then make the change by contacting Tina Shaheen. She will navigate you through the details of the current local market.
