Affordability – Still available in 2023?
Whether you’re looking to buy your first home or eyeing to make a move to better accommodate the life you are living, it’s natural to wonder what the housing market will look like in 2023. After all, it pays to plan ahead. But when it comes to predicting the future of home prices, so many variables come into play that even the experts have difficulty giving a definitive answer. Let's take a look at some of the factors that could impact affordability in 2023.
1. Interest Rates
When interest rates go up, borrowing costs increase and buyers become more concerned that they can enter the marketplace. When rates rise significantly, it does not remove your ability to move forward with that new home, it just means you must be more budget conscious and shop for true VALUE! buyers and fewer people may be able to afford homes.
A December 2022 online article in The Washington Post “Waiting for Home Prices to Drop? Bad Strategy” by Alexis Leondis we are told;
“Although most economists think rates have peaked — or close to it — the consensus is that rates will hover around 6.5% or 7% for 30-year fixed mortgages for the foreseeable future.”
Furthermore she adds;
“Ultimately, when searching for a house, buyers should expect home prices and mortgage rates to be more or less where they are today.”
THE TAKEAWAY: If rates are going to stay in the same vicinity, you need to assess your own situation, what you are paying for rent, and what factors could lead to building your own equity in a new home. Afterall, renting is paying 100% in interest!
2.Housing Supply & Demand
Although demand has decreased somewhat there are still buyers in the marketplace. Housing is a necessity and with the current market rental rates, purchasing a home is still an attractive option.
A January 2023 online article in thehill.com “Survey finds Americans wildly misinformed on housing market” by Daniel De Vise stated;
“Twenty-eight million Americans plan to purchase a home in 2023, according to a survey released Tuesday by NerdWallet, the personal finance company. On average, they hope to spend $269,200.”
And more to De Vise’s point he says;
“Nearly 30 million Americans plan to buy a home in 2023. In all likelihood, just a small percentage of them will succeed: Only 6 million existing homes sold in 2021. “
THE TAKEAWAY: More people will look to buy used/existing homes than there are homes available for sale.
In this same article De Vise goes on to discuss the affordability reality of home prices today when discussing the average $269,200 price discussed above;
"But that figure falls more than $100,000 short of the median home price, which was $388,100 in December, according to the real estate brokerage Redfin. Home prices crossed the $269,000 threshold sometime in 2013, Federal Reserve statistics show.
If prospective homebuyers sound oddly optimistic about prices, that may be because they are pessimistic about the state of the housing market. Two-thirds of Americans surveyed said they expect an imminent crash.
Real estate economists do not. Lawrence Yun, chief economist for the National Association of Realtors, forecast an average sale price of $385,800 this year, about the same as last year. Redfin predicts a 4 percent drop: bad news for sellers, but hardly a crash."
THE TAKEAWAY: New home buyers don’t feel good about the housing market but research, prediction, and trends tell a different story. With rates remaining consistent with where they are and prices remaining where they are, it is imperative to search for affordable options when considering a new home!
How do you do that?
Consider building a new home on land that you own or will buy for your new home choice.
When you build a home, you take supply and demand out of the equation. Also, when building on your own land, there are not the same factors that drive up the cost of “neighborhood/developer” land. No need for retention ponds, sewer lifts stations, etc. and this saves you the money the developers charge each lot to compensate for their costs! Typically, when you build on land you own, you will need some lot clearing and grading and a simple Septic System and Water Well on your homesite. Most often, it costs far less to prepare one lot for a home and this in turn, saves YOU money!
Combine that with an affordable home and this is where you can really impact those goals of making good on your Dream Homes desires.
For example, one on your lot home builder, Red Door Homes of the Carolina’s, focus on providing the most square footage for the most affordable price. This is done using name brand materials, but also beginning the home at a “base” level that allows each customer to personalize their home with what is important to them – all the while keeping their personal budget in mind. You can check out their floorplans to see a sample of their base prices here:
Red Door Homes has locations in Fayetteville, NC Greenville, NC, Raleigh, NC and Florence, SC as well.
What does this mean for you?
Overall, predicting what will happen with home prices in 2023 is difficult, but in areas of high growth and higher rent it is important to know your facts! Based on the article above “Survey finds Americans wildly misinformed on housing market” by Daniel De Vise, and the floorplan base prices on the Red Door Homes of the Carolina’s website, we know that builders like Red Door Homes of the Carolina’s can attain the elusive affordably priced home by building on land that you own!
Understanding the forces that impact your decision for a new home is the key so when you are ready to learn more about how it can be done or simply stick your toe in the water, let us know, we will try and make it easy for you. Our intention is to educate you on your options you will not be pressured here. We will communicate and keep you informed of opportunities, but the decision is yours! Hope to see you at Red Door Homes of the Carolina’s in 2023!
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You can have a stick-built, custom home that's on your land for less than most manufactured, mobile, or modular choices. When it comes to your land and your Dream Home choose the best option without compromising - Red Door Homes!