Now May Be Your Last Best Chance to Sell! Perhaps that headline seems a bit dramatic? Maybe, but over the past ten years, I've been advising my clients that super low interest rates represented an historic opportunity to buy. That period is officially over, and buyers who ignored the opportunity missed it. It seems likely to me, we may never see interest rates as low as they have been over the last decade.
So, when I tell you that the Spring 2023 Real Estate market may be your last best chance to sell your home at a great price, I mean that with all of the urgency and seriousness that I used to direct at home buyers. Why do I believe this?
Leading Economists are Still Predicting a Small Increase in Home Prices in 2023
Lawrence Yun, NAR chief economist and senior vice president of research, predicts sales in 2023 will decline by 6.8% compared to 2022 but home values will increase by an average 0.3%. Housing prices have not fallen (yet). Look at what you paid for your house and see the historical increase in value. It’s still there! You have equity in your home!
Interest Rates Will Continue to Climb in 2023
The Fed's key benchmark borrowing rate is projected to rise another three-quarters of a percent in 2023 hitting a 17 year high of 5 - 5.25 percent from it's current 4.25 - 4.5 percent level according to the Fed's media projection from December. (Source: Bankrate.com)
Personally, I think the Fed may continue to raise interest rates UNTIL they see a decrease in home prices. That may be the only way for them to truly reduce inflation, which is their primary mandate.
Inventory Remains at Historic Lows
The stats for Northern Virginia and the Eastern Panhandle of West Virginia show “Low Inventory”. There aren't enough homes on the market to satisfy demand. DAAR’s November Market Indicator shows that Loudoun County, VA, as of November 2022, had 504 Active Listings. There are still buyers out there, described in the US News Article “Why You Should (or shouldn’t) Sell Your Home in 2023”.
When Will Interest Rates Decline Again?
When people ask this question, I think what they mean is, "When will see rates as low as they were from 2009 - 2020?" To me the answer to that question may be never, or not for a long time. Interest rates were initially suppressed in response to the Global Financial Crisis of 2007 - 2008. That move was a stimulus to get lending moving again and keep the economy running. Low interest rates remained important over the past several years as we dealt with the Global COVID Pandemic. But look at the chart below. At no other point in modern history have rates reached or remained near zero. We may never see that rate environment again.
It's Still a Sellers Market - Act Accordingly
Home prices are still at historic highs and forecast to increase although at a slower rate. Inventory remains low and buyers are still fighting over too few homes. They may not be fighting as hard as they were last year. But sellers are getting their price and houses aren't staying on the market for long. Interest rates are forecast to increase by as much as another full basis point before the end of the year.
I don't have a crystal ball. I don't have an advanced degree in macroeconomics. I can't tell you for certain what will happen over the next 5-10 years, no one can. But, as a busy Realtor I can tell you what is actually happening in the market right now. And for the moment, sellers still have the edge. If your future financial plan is contingent on cashing out the equity that has built up in your home over the past 10-20 years, I urge you to consider taking advantage of the Spring 2023 Real Estate Market.
Are you ready? Now check out my recent Guide to Prepping Your Home for the Spring Real Estate Market.
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