Housing Market Predictions: What are the experts saying?
5 minute read
December 23, 2022


One thing to know about the economy and the housing market is that it’s constantly fluctuating, and has been especially since the pandemic.

While it may seem risky to buy a house while the market is in a state of flux, there’s a lot to cover to understand housing market predictions fully. 

We will discuss current housing prices, what all this recession talk is about, and what kind of mortgage rates are expected for 2023. 

Ultimately, only you can decide if it’s the right time to buy—but we’re here to guide you and provide the best resources so you can feel confident in your purchase. 

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Housing market predictions this year

At the end of last year, interest rates for a 30-year mortgage were hovering around 3%. During this time, it was an extremely competitive time for buyers as everyone wanted to take advantage of low rates.

Comparatively, current interest rates for a 30-year mortgage range around 7%. While high-interest rates are intimidating, they’re meant to slow buying and decrease home prices. 

And if that’s the case, then securing a home now would seem tempting for buyers as it could lead to potential savings.

Housing prices and sales

Experts are saying that home prices are starting to decline and that in 2023 we may even see the end of the seller’s market.

While inflation plays a role in this mathematical tango, that isn’t always a negative.

Higher interest rates help to fight against inflation. Inflation is a complex subject, with many variables, the biggest of which are supply and demand.

So the Federal Reserve plays a chess game with inflation, and by raising the interest rates, they hope that supply and demand will begin to balance.

A strong economy also means that sales are consistent and expected. Recently, sales for single-family and construction mortgages have been on the decline. 

This is partly because the supply of goods to build a home is still recovering from the pandemic-related delays and price jumps in 2021.

What is a housing recession?

The phrase housing recession has been buzzing around in the news lately. 

While this may seem to be apparent, this can be interpreted in many different ways and does not mean that house appreciation is going to drop.

As a potential home buyer, it’s imperative to understand what a recession is and how current trends affect the housing market predictions.

Historically, a housing recession has previously been defined as foreclosures and overwhelming mortgages.

A housing recession can also be defined as the declining economic relationship and trend between home buyers and the housing market. 

Do housing market predictions point to recession?

The housing market encompasses more than just single-family homes. It also includes multi-family homes, rentals, and new construction. 

And while current sales are on a slow decline, conventional mortgages are still affordable, and home costs haven’t been negatively impacted—quite the opposite.

So while some may say we are in a housing recession, we would argue there’s more to the story.

When you think about the supply and demand of homes, many millennials are currently on the hunt.

This keeps demand high so while sellers might receive fewer offers than they would have in 2021, they’re still getting offers without drastically lowering their prices.

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What do the experts say about mortgage rates in 2023?

Housing demand may be neutralizing but supply is slowly increasing. Home values are continuing to appreciate in most markets. Experts seem to have mixed predictions about the fate of interest rates. 

The Mortgage Bankers Association (MBA) predicted that we could see interest rates for a 30-year fixed mortgage below 6% as soon as the second quarter of 2023.

Overall housing market predictions

The overall concern is that a rise in interest rates will continue into 2023. Other mortgage experts predict housing market interest rates may increase to 8% by 2025.

And while this may seem daunting, we must remember how current housing market trends and predictions aren’t the only things to factor into your decision to buy a home.

So when is it a good time to buy a home?

Is now the right time to purchase your home and apply for a conventional mortgage?

This depends on your financial situation and the loan options available to you.

You may also ask yourself some questions to have a better understanding of your financial and home situation and goals.

Some questions to ask yourself could be,

  • What type of home and mortgage would be best for me?
  • Is the home within my price range?
  • How much of my salary will go to the cost of my home?
  • What’s my current credit score?
  • What are the selling trends and market values for homes nearby?

It would also be helpful to use tools like mortgage calculators to get a clear picture of what options are available to you.

But most importantly, don’t be intimidated by expert predictions. Every buyer’s financial situation is different and the choice will ultimately be yours. 

AAA Banking offers you options  

Meet with an experienced lender such as AAA Banking to review your financial scenario and receive accurate loan options that meet your financial needs.

Our partnership with HomeScout offers the tools and resources available to help you find your dream home and work with a trusted realtor.

Whether you want to discuss how to obtain your future dream home or are ready to apply for a mortgage and review the deals we can offer—we’ll be with you every step of the way. 

We understand there’s a lot to decide—that’s why AAA Banking is here to help. 

Reach out to us today to speak with one of our expert professionals.

Photo by Adeolu Eletu on Unsplash

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