A more balanced market dependent on Mortgage rates

Yes, 2023 will be the year that the market goes numb, but there is a silver lining and that is that we live in DFW. But before we dive into talking about the future, let’s recap the past and what got us here.

The first six months of 2022, where mortgage rates huddled around 3 percent, was a prosperous time for sellers. Things turned on a dime, however, when the Federal Reserve started raising rates at an astonishing rate all the way up to its current rate of 4.375 percent.

“The housing market has been running at a frenzied pace for the past two-and-a-half years, but the reckoning is at hand,” said Lisa Sturtevant, chief economist for Bright MLS, in a 2023 U.S. housing market outlook.

This translates to mortgage rates hovering around six to 6.5 percent which are the highest we have seen since 2008. Homeowners who have mortgages in the three percent and under range do not want to sell and buy another home with a mortgage at six-plus percent.

My predictions looking forward? I do expect to see the inventory increase beginning in 2023. Prices overall in the US will drop by 10 percent but DFW will drift only five percent. That is if homes are priced correctly initially and not based on early 2022 pricing. As soon as we see a six-plus month inventory, we will turn to a buyer’s market. Currently, we are in a balanced market with four to five months of inventory nationwide.

In DFW I still feel as though we have an inventory shortage and all the buyers I am currently working with want everything done inside and outside. Time has gotten to be our most precious asset, especially among millennials. I do see a downward trend of mortgage rates in the end of 2023 and if we can drift down under the six percent rate, I expect the housing market to pick up.

Here are some parting words of advice if you heard nothing else in this update:

Sellers: Be sure the price is right!

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Alison JensenJanuary 5, 2023