Housing and Mortgage Market Forecast For Homebuyers

Housing and Mortgage Market Forecast For Homebuyers 2023

Gustan Cho Associates are mortgage brokers licensed in 48 states

In this article, we will discuss and cover the housing and mortgage market forecast for first-time homebuyers in 2023.  The Housing and Mortgage Market Forecast was very strong for first-time homebuyers. The strong housing market is expected to continue through 2023. Despite record high inflation and high home prices, many homebuyers are taking advantage of the slight slowdown in the housing market to put offers in.

The housing market was booming despite skyrocketing inflation data under the Joe Biden Administration. Unemployment numbers are at under 5.0% despite the coronavirus vaccine mandate from the White House.

FHA and Conforming Loan Limit For 2023 Increase Due To High Home Prices

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Housing prices have been increasing year after year with no signs of any slowdown. However, home prices show signs of stabilizing, and it may turn into a buyer’s market.

Many people are holding off buying a house due to high rates. Mortgage rates will drop. Home prices have stabilized, and homebuyers can buy a home now due to lower demand. When rates start dropping, you can expect home prices increase and the bidding war on homes to contune.

What Caused Increase In Housing Prices?

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Mortgage rates have surpassed seven percent but are showing signs of a correction in the next three to 12 months. Many potential homebuyers have second thoughts about a home at these price levels. Nobody ever imagined home prices had skyrocketed the way it did. Mortgage Rates were at 2.5% just a year ago.

Mortgage rates on single-family homes at 7% need to be digested by Americans. Non-QM and alternative financing mortgage rates are north of 10% with discount points. In the following paragraphs, we will cover the housing and mortgage market forecast for homebuyers for 2023.

Rising Inflation and Skyrocketing Home Prices

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Due to rising home prices, HUD and the FHFA have increased FHA and Conforming Loan Limits for the past five years. HUD increased the 2023 FHA Loan Limits to $472,300. The Federal Housing Finance Agency (FHFA) has increased 2023 conventional loan limits to $726,200.

The Dow Dones Industrial Average and all other equity market indices hit a historic high couple of weeks ago. There is a lot of talk about a stock market selloff and housing market correction due to the Democrats spending spree and the incompetence of President Joe Biden and Vice President Kamala Harris.

Stock Market Volatility Causing Nervousness Among Homebuyers

A stock market selloff enters correction territory when the market drops 10% or more. The Dow hit a historic high and surpassed 36,000 points last week. Joe Biden has implemented the coronavirus vaccine mandate for companies that employ 100 plus employees. The first coronavirus death was reported in Washington State, where a man in his 50’s died.

Fed Chairman Jerome Powell announced on Friday that the Federal Reserve Board will do everything possible to bring stability to the market. The Feds lowered interest rates to zero percent. This article will cover the housing market forecast for first-time homebuyers with skyrocketing home prices in this article. We will also cover the benefits of buying and refinancing a home mortgage.

Housing Market Forecast Versus The Plunging Stock Market

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The coronavirus scare is not affecting the stock and housing markets. The definition of a market correction is when the market drops 10% or more. The Dow tanked more than 13% in 5 trading days last week, making it the worst decline since the 2008 financial crisis. The plummeting equities markets are good for mortgage rates.

When the Dow and other equity markets tanks, mortgage rates plummet. This is what is happening, which means homebuyers and homeowners will get lower mortgage rates. Nobody has a crystal ball, but the housing market was booming before this market selloff and stock market correction. If anything, many experts anticipate a surge in mortgage applications due to the plummeting mortgage rates.

Many baby boomers are retiring and downsizing. This is going to bring more demand for the 2022 housing market.

Housing Market Forecast on Home Inventory Versus Demand

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The demand for housing is boosting home values and prices. Depending on the area, home prices have been skyrocketing year after year. As mentioned earlier, HUD and the FHFA have raised loan limits due to skyrocketing home prices. With the uncertainty of the stock market and the recent market selloff, mortgage rates are tumbling like never before. With low mortgage rates, the demand to purchase a new home and refinance their current mortgage will be higher than ever.

Housing Market Forecast on Home Purchase

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The Housing and Mortgage Market Forecast is stronger than ever. A home is one of the most important financial decisions Americans will make. A home purchase is the largest investment most Americans will make in their lifetime. Most homebuyers will get a mortgage to purchase a home. This means they will need to make timely housing payments for the next 30 years. Risks factors in being unable to make their mortgage payments include the homeowners losing their jobs, getting divorced, and getting sick.

The Importance of Income and Employment For Homebuyers

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If the homeowners stop making their mortgage payments, the lender will start foreclosure proceedings, and the homeowner may lose their homes. Job stability is very important. Economic conditions affect job stability. This is why market conditions affect the decision-making process for homebuyers.

It does not seem like the current coronavirus scare has deterred potential homebuyers. However, as the financial markets remain volatile and the cure of the coronavirus still remains uncertain, it may affect the U.S. housing market. Fundamentally, the housing and mortgage market forecast remains strong. Mortgage rates are expected to plummet in the days and weeks to come. We do not expect any slowdown in our housing and mortgage market forecast.

The Housing and Mortgage Market Forecast on Buying Versus Renting

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Financial security is key when considering buying a home. The lower your debt-to-income ratio, the safer you are. You do not want to struggle to make monthly payments every month.

Even though the lender will approve you with a high debt-to-income ratio, you need to consider how much home you can afford versus how much house you can qualify for. The Consumer Financial Protection Bureau (CFPB) recommends a total debt-to-income ratio below 43%.

What Experts Say About The Housing and Mortgage Market Forecast

Is 2023 a Good Year To Buy Your First Home?

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The housing and mortgage market forecast remains stronger than ever. Even with the coronavirus scare and the stock market selloff, the housing and mortgage market forecast is expected to remain stronger than ever.

Homebuyers must understand that the economy and the overall markets are fundamentally strong. Market volatility is expected. During the 2008 financial crisis, the stock market dropped by 60%. The Dow Jones plummeted from 16,000 to 6,000. However, the markets recovered, and we are still in a raging Bull Market. The key is not to panic during times of market volatility.

This blog on housing and mortgage market forecast was published on December 2nd, 2022

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