Housing News
What's Ahead for Home Buyers In 2023?
The beginning of a new year always brings with it a sense that change is on the way. This year will not be the same as last year. Things will be different. But how? Well, if you are a prospective home buyer, one recent forecast has some ideas. Released by a popular online real-estate portal, the forecast says 2023 should be an easier year for buyers, after two years of rapidly changing affordability conditions. Put simply, the housing market should begin to stabilize.
Home price increases have slowed, and values are expected to remain flat in 2023. Prices may even fall slightly in markets where they skyrocketed over the past two years. Similarly, mortgage rates, after spiking in 2022, may also begin to calm – especially if inflation and labor market tightness continue to ease. With rates and prices more stable, home buyers should have an easier time determining how much they can afford and what to expect when house shopping this year.
Finance News
Home Price Appreciation Slows Year Over Year
Home prices have been climbing for a long time. In fact, prices began increasing just a few years after the housing crash in 2008. But according to a new analysis from the American Enterprise Institute's Housing Center, the price boom that began over 10 years ago may have finally ended. The analysis found that home price appreciation was up 6.7 percent year-over-year in November. That is a smaller increase than in October when prices were up 8.6 percent year-over-year. It is also much lower than in March 2022 when prices were 18.3 percent higher than year-before levels.
In other words, home prices have softened significantly from their post-pandemic peak reached last spring. How much they have softened, though, depends on several factors. Location is one. For example, homes on the west coast have seen sharper declines than other areas of the country. It also depends on the price tier, with high-end homes seeing bigger declines than more affordable homes.
Mortgage News
Mortgage Rates Increase to End 2022
According to the Mortgage Bankers Association's Weekly Applications Survey, average mortgage rates increased during the final two weeks of 2022, with rates up for a few fixed-rate loans with both conforming and jumbo balances, loans backed by the Federal Housing Administration and 5/1 ARMs. Higher rates – combined with the holiday season – led to a drop in demand for mortgage applications.
Joel Kan, MBA's vice president and deputy chief economist, says home purchase activity has slowed. “Purchase applications have been impacted by slowing home sales in both the new and existing segments of the market,” Kan said. “Even as home-price growth slows in many parts of the country, elevated mortgage rates continue to put a strain on affordability and are keeping prospective home buyers out of the market.” Demand for home purchase loans fell 12.2 percent over the past two weeks compared with two weeks prior. The MBA's weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications.
Economic News
Loan Change Affects High-End Home Shoppers
If you are shopping for a home over a certain price, you may need to get a jumbo loan. Jumbo loans cover larger loan balances and often have stricter standards, including requiring a higher credit score and a bigger down payment. But what is the amount over which you will need a jumbo loan? Well, it changes.
At the end of 2022, it was $647,200. Any loan balance below that was considered conforming and balances above that required a jumbo loan. But the Federal Housing Finance Agency – the agency that sets conforming loan limits – recently announced the limits were rising, including to over $1 million in some high-cost markets. The change, according to one analysis, means more than two million homes across the country can now be purchased using a more accessible financing option, potentially opening additional inventory for some high-end home shoppers.