6 Things to Consider When Buying a Home in 2023
The last couple of years landed quite a heavy blow on the real estate market. Suffice to say, forced to deal with the global pandemic and countless financial hurdles, people weren't feeling very inclined to invest so much money in new properties.
Well, we are happy to report that these days are slowly becoming a thing of the past, and, rest assured, greater financial certainty also gives people the confidence to, once again, kick the real estate sector back into high gear.
But is the market now the same as the one we left back in 2022? The answer is – hardly. New times and new circumstances always paint the market with new challenges and things to consider.
So, what can you expect if you buy a house in 2023? Let’s find out.
1. The increase in mortgage rates
It is not that big of a secret that the US economy is currently going through a very rough patch.
Because of that, the federal government is forced to make some unpopular moves to get things back on track. Trimming the purchase of bonds and mortgage-backed securities makes one of these measures.
Be that as it may, this new conservative policy will almost certainly cause higher mortgage rates and present new obstacles in front of an average buyer.
Forced to lower the base price they need to pay, we may see buyers migrating to more remote locations where they will experience very stiff competition.
2. Spiking appreciation rates
Properties were always considered some of the safest investments, and healthy appreciation rates played a significant role in building such a reputation.
However, ever since the start of 2022, we have been experiencing appreciation rates that are, even all things considered, off the charts, with territories like Arizona leading the pack with figures as high as 28.3%.
While this situation presents numerous obstacles on the front end, people looking for a safe investment will be more than happy with the projected returns. More investors, in turn, will create an even more competitive market.
3. Shady insurance policies
As we already mentioned, the last couple of years were very rough. Now when the tide is turning, it is understandable that people are looking for any ounce of certainty they can get.
This situation leaves them open to various practices where, for instance, insurance companies will try to sell them insurance products like CCI (Consumer Credit Insurance) they have no actual use.
Since this practice is considered unethical, the buyers who suspect they have been sold such a product are encouraged to look for the CCI insurance refund representatives, get their funds back, and spend that money elsewhere.
Homebuyers may also be encouraged to purchase mortgage life insurance, which protects the policyholder’s mortgage in the event that they pass away by providing a payout to the mortgage provider.
However, most homebuyers may want to consider term life insurance instead, as the payout for this type of insurance is paid directly to the policyholder’s beneficiaries and has wider applications in addition to protecting their mortgage.
4. Limited housing inventory
This problem was plaguing the real estate market even before the outbreak of COVID-19. However, now that we are seeing an entire onslaught of new buyers ready to acquire new properties, it becomes evident that the very limited supply cannot keep pace with the surging demand. So, what does this limited housing inventory mean for an average homebuyer? Keeping in mind all the things we have covered so far, many people will be forced to consider various compromises in the form of different geographical locations, smaller homes, or alternative property types (e.g., townhomes or apartments).
5. Younger buyers are at a disadvantage
This is not something we are happy to report, but things are as they are. A long time ago, homes were much cheaper than they are now, and boomers and older generations did use these circumstances to flood the market. However, the quality of life is constantly improving, and with these generations living longer, happier, and more fulfilled senior years, very few of these properties return to the market. Let's consider those older generations traditionally have the finances sorted out much more than their descendants. We will see why younger homebuyers will have to fight an uphill battle.
6. The cost of construction should come down
Recently, the cost of construction materials and construction services, in general, have been soaring. But, midway through 2022, things are finally turning around. For instance, the construction material shortage is easing, and the prices of lumber are falling back in line. All these factors will hopefully create an environment where construction prices should come down – so much so that the new homebuyers should strongly consider skipping the already crowded market and try to start everything from scratch. It will take more time, but it will prove much safer.
Final Thoughts
We hope these few examples gave you a general idea about the current state of the real estate market and hopefully helped you come up with a strategy to turn these odds in your favor. Of course, this is only the tip of the iceberg, and we could talk about this topic in much greater depth, but you get the overall idea.
The housing inventories are severely lagging behind the demand, which causes very tough competition across the board. But, the first step in solving some issues is knowing their existence. Well, now you know how to start tackling this one.
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