2023 Real Estate Wrap Up

As 2023 winds down, the housing market appears to be following suit. The number of homes for sale decreased 2 percent compared to October of last year, while there were 3.2 percent fewer newly listed homes and the number of pending listings decreased 7.6 percent during the same time frame.

 

While inflation continued on a downward trek as the year progressed and is currently well below the 6.4 percent rate that opened 2023, the Federal Reserve’s goal of 2 percent has still not been realized. Housing continues to be one of the largest contributors to inflation, making up more than half of the increase to the Consumer Price Index’s all-items increase in September. The Federal Reserve has once again hit the pause button in regard to inflation. After raising rates 10 times in 10 meetings in 2022 and 2023, the central bank took a break in June, then again at its September meeting. After its November 1 meeting, Fed Chairman Jerome Powell announced no change in interest rates for the time being.

 

These pauses, however, have not yet translated into a great deal of relief in mortgage interest rates, which currently hover at or near 8 percent. As of November 1, the average mortgage rate on a 30-year fixed loan was 7.95 percent.

 

The future of the market hinges heavily on the direction mortgage rates take moving forward. If they go down, that should spur much more activity and entice both buyers and sellers who had been holding off until conditions improved.

 

Steep mortgage rates are putting a damper on sales volume, but the market still favors sellers on multiple fronts, including prices. The National Association of Realtors’ data shows that September home sale prices were up 2.8 percent year-over-year, and the increase was even more pronounced in some specific regions. Low inventory also gives sellers the edge: September saw a 3.4-month supply of housing inventory, which is short of the five or six months typically needed for the market to be considered balanced.

 

So should sellers try to sell now or hold off? In September, the amount of time homes took to sell was around 21 days. High mortgage rates continue to keep some potential buyers on the sidelines. It is important to do your research. Current market dynamics are complex, evolving, and differ by location. Sellers should make sure they have a realistic understanding of what their home is worth in their specific area. Analyze your financial situation and life situation, as well as the state of your local market, before jumping into the market.

Buyers should crunch the numbers to understand exactly how much house they can afford. Getting preapproved for a mortgage can also be very helpful, giving you a solid idea of the amount a lender would be willing to offer you. If you can afford to enter the market, you are likely to encounter less competition.

Whichever side of the transaction you are on, work with an experienced local real estate agent to help you to navigate your specific market successfully.

 

Debbie Austin is a realtor associate with Keller Williams, Roseville and has been helping clients buy and sell property in the area for 19 years. If you have a specific real estate question you wish to see addressed, contact Debbie at (916) 223-8144 or visit debbieaustinrealty.com.