Will summer 2023 be a repeat of summer 2022?
As we enter 2023, the real estate market has continued to remain strong with high demand and low inventory. While the pandemic had some impact on the real estate industry in 2020 and 2021, the market has largely bounced back, and many areas have seen record-breaking sales.
One of the biggest trends I am seeing in the current real estate market is the continued rise in housing prices. The combination of low inventory and high demand has created a competitive market, with bidding wars and offers well over the asking price on desirable homes in desirable locations are still very common. Mortgage interest rates are no longer at historic lows as they were over the past few years, and we are now seeing interest rates for homes closer to historic averages, or on the low side of average. Rates under 6% are currently attainable and many people consider any interest rate of 6% or less to be low. It’s still inexpensive to borrow money for a home but a higher interest rate does translate to reduced buying power for prospective home buyers. While many predicted, or hoped, that this would drive demand and home prices down, I am not seeing it happen in the Southeastern Pennsylvania and Philadelphia Metro Area markets. It is still very much a seller’s market. Buyers are finding themselves facing steep competition and being a well-qualified borrower is, unfortunately, still a make or break factor.
Another trend in the current real estate market is the continued popularity of suburban and more affordable rural areas. Many people are still seeking larger homes with more outdoor space and room to work from home, which has led to increased demand in these areas. Metro areas like Philadelphia are also starting to see a resurgence in home demand as the city living regains its pre-pandemic appeal.
Most common questions people are asking about the current 2023 real estate market:
- Is now a good time to buy or sell a home? Should I wait?
- How has the pandemic affected the long-term real estate market?
- What impact have rising interest rates had on the market? Are we in a buyer’s market?
- Are there any areas that are particularly hot right now?
- How has technology impacted the real estate industry?
Now, let’s answer these questions in more detail.
- Is now a good time to buy or sell a home?
While the current real estate market is competitive, it can still be a good time to buy or sell a home, depending on your individual circumstances. For sellers, the high demand and low inventory can make it a good time to put your home on the market and potentially receive multiple offers, allowing you to sell with favorable terms such as waived inspections, leaseback periods, or a closing date that gives you time to relocate to your next home. For buyers, while it may be more difficult to find a home in certain areas, current interest rates are still low enough that homeownership is in reach, but you may have to be persistent and willing to compromise on some “wants”. Never compromise on your “needs”. It’s important to work with a knowledgeable and experienced real estate agent who can help guide you through the process, and provide insights specific to your wants and needs, financial situation, and local market conditions.
Whether or not you should buy a home now or wait depends heavily on why you want or need a new home in the first place. If your quality of life will be greatly improved by buying a new home and you can afford a home you’ll be happy with now, don’t wait! Don’t try to time the market. Weigh the risk versus reward. There is no crystal ball to tell us what will happen and the potential for homes to become more expensive does exist. Home values have consistently gone up over time.
- How has the pandemic affected the real estate market?
The pandemic has had some impact on the real estate market, but overall it has remained strong. While there was a brief slowdown in sales the home values are largely remaining stable. The pandemic has also led to some changes in the way homes are marketed and shown, with more virtual tours and online listings becoming common as people have become comfortable with doing so many things remotely.
- What impact have rising interest rates had on the market?
Many people believe that when mortgage interest rates increase this indicates a buyer’s market, and when rates are low that means were in a seller’s market. While interest rates do play a factor in real estate market conditions, there are other key factors like available housing supply or “inventory”. Inventory of homes is still very low in many parts of the country and especially on the east and west coasts. While interest rates have started to rise slightly in 2023, they are still relatively low. Low supply of homes and relatively high demand is keeping us in a seller’s market. It’s not the extreme seller’s market that it was in 2021 and 2022, but a seller’s market nonetheless. Interest rate increases can potentially impact the affordability of higher-priced homes and make it more difficult for some buyers to secure a mortgage. However, interest rates are still relatively low compared to historical averages, and it’s important to work with a lender to understand how fluctuation rates may impact your individual situation.
- Are there any areas that are particularly hot right now?
Suburban areas like the Philadelphia Main Line, Abington Township, Upper and Lower Merion Townships, and lower priced rural areas with lots of new construction homes are still in high demand. Urban areas are also starting to see a resurgence as businesses fill vacant commercial spaces and people return to their offices in Center City. In addition, areas with strong job markets and growing economies are also popular among buyers. Particularly, many buyers are looking for a mix of both suburban life and some aspects of city living. Homes near SEPTA Regional Rail stations in walkable neighborhoods, near downtown-style commercial corridors are some of the hottest properties on the market right now.
- How has technology impacted the real estate industry?
Technology has had a significant impact on the real estate industry, with more buyers and sellers using online tools to research and market homes. Virtual tours and online listings have become more common, and real estate agents are increasingly using technology to better serve their clients. In addition, technology has enabled more efficient and streamlined processes, making it easier to buy or sell a home. However, it’s important to note that while technology has enabled many positive changes in the industry, it can never replace the value of working with an experienced real estate agent who has knowledge of the local market and can provide personalized guidance and advice.
The current real estate market in 2023 remains strong with high demand and low inventory leading to increased competition and rising housing prices. While there have been some changes in the way homes are marketed and shown due to the pandemic, the market has largely bounced back and is expected to continue its upward trend. As with any market, it’s important to work with an experienced real estate agent with an established track record and a knowledgeable local lender to understand your options and make informed decisions that are best for your individual circumstances.
