HOUSING OUTLOOK 2023

What will the new year bring for homebuyers, homeowners and home sellers? Lower or higher home prices? Higher or lower mortgage interest rates? Or a continuation of the overheated pandemic-inspired housing market?

There’s no question that the blistering housing market of the past three years was hard on homebuyers. By October 2022, the average mortgage interest rate for a 30-year fixed is 7.24%, more than double the 3.22% level in January 2022.

According to Fannie Mae, the combination of high inflation, monetary policy tightening, and a slowing housing market is “likely to tip the economy into a modest recession in the first quarter of 2023.”

Many economic forecasters believe housing prices will decline, but that homebuyers shouldn’t fear buying during a declining

market. Morgan Stanley predicts a 7% dip in home prices for 2023 that would return housing prices to where they were in January 2022 – 32% higher than prices were in March 2020 when the pandemic began. Economists with Goldman Sachs and Moody Analytics are predicting 5% to 10% declines in home prices, based on lack of homebuyer affordability, slowing housing sales, fewer mortgage applications and a looming recession, however mild.

BusinessInsider.com reports that the Federal Reserve’s overnight rate hikes have raised mortgage interest rates, pushing affordability to new lows, but that a recession could bring interest rates down again. That combined with softer homebuying demand due to inflation and sellers lowering their prices would make spring and summer 2023 great times to buy a home.

GET READY TO BUY A HOME IN 2023

Inflation, home prices and interest rates were higher in 2022 than they’ve been in years, but if you’re planning to become a homeowner in 2023, you’ve got time to improve your buying power.

TheMortgageReports.com recommends talking to a mortgage lender, even if you aren’t ready to buy until later in the year. They can “review all aspects of your financial picture” and help you find sources for a down payment, help you raise your credit score to improve your future borrowing rate and help you find ways to reduce your existing debt without triggering costly inquiries into your credit history. Most important, they can help you understand the differences between conventional (Fannie Mae, Freddie Mac) and government-guaranteed (FHA, VA, USDA) loan programs and help you choose the right loan so you can work toward qualifying for the most favorable terms.

HOME DECORATING TRENDS MAKING A COMEBACK

All interior design trends change, often in the opposite direction. After years of cool, grey minimalism, homeowners are turning toward the past for cozier inspirations.

Greens and other warm neutrals

Golds and avocado greens from the 1960s and 1970s revolutionized kitchen appliances and made complementary autumn colors like oranges, tans and browns wildly popular. If you like the look of clean look of white and grey, but want a newer look, colors, try cream, beige and earth tones instead.

Texture everywhere

Texture gives neutral colors like beige, stone and greys more interest. Interior designers Dorothy Draper and William Haines popularized “Hollywood Regency” in the 1930s, ‘40s and ‘50s.

Apartmenttherapy.com recommends getting the opulent, glamorous look with gold or shiny metallic accents pieces, jewel tones such as emerald green, mirrors with speckles and sparkle, a touch of Chinoiserie fabric on chairs or in wallpaper and crystal chandeliers. Plaster, a lime-based putty, adds depth to colors and textures. Get the look with special paint finishes.