Many economic changes in the US are impacting real estate. But what are the top trends to be mindful of? Learn about a few new real estate trends to watch for throughout this year.
If you are interested in buying or selling in or near Lexington, South Carolina, work with the Lafayette Team with EXP Realty. We have the experience and expertise to help you find your dream home and to make your selling experience pleasant.
In this article, we’ll explain the new real estate trends you should watch in 2023.
Top 4 Real Estate Trends
Trend #1: Inventory is low but growing
For some time now, we’ve been dealing with low inventory, which just means that there have not been enough homes available to meet buyer demand. However, since May 2022, inventory has been increasing.
This means that homes won’t stay on the market long and buyers need to be ready to buy when they go house hunting. Here are a few tips:
- Sacrifice some of your flexible wants
- Expand your search
- Get a pre-approval
This means that if you’re selling, you have less competition and will likely receive several offers. However, it’s also important to keep in mind that interest rates have knocked some buyers out of the market. Therefore, while you will be getting offers, you might not get as many as you would have in previous years.
Also, make sure that you’re ready to move when you sell. The buyer may not allow you to stay there until you find somewhere else, though you may be able to include that in the buying agreement.
Trend #2: Home Values are Rising
Home values are continuing to rise. In November 2022, home values were 11% higher than in November 2021. However, this is lower than the 16% increase seen in June/July 2022, which is a sign that the increase is slowing down.
However, since there is still a high demand and a shortage of homes available, prices are not going to drop.
If you’re planning to buy, you need to know how much you can afford and stick to your budget. While it can be frustrating to wait until you find a home that fits your budget, you’ll be glad you did when you’re paying your mortgage.
If you’re selling your home, you can expect a decent profit- which can help you buy your next home. In order to get the best offer from your home, work with an experienced agent and wait for the right offer.
Trend #3: Interest Rates are Higher
In 2021, mortgage interest rates were lower than they’ve ever been- but that has since changed. In 2022, the Federal Reserve increased interest rates, which caused the average rate of a 15-year fixed mortgage to jump from 2.8% in January 2022 to 6.36% in October.
Unfortunately, for buyers, this can make it more difficult to afford a home. However, don’t let this scare you. Don’t feel pressured to give in to a house you can’t afford- but even a high rate on an affordable home is possible.
This means that buyers may not be as motivated to buy your home and it may sit on the market for a bit longer. Therefore, be patient while you wait.
Trend #4: Risky Buying Options More Accessible
Due to rising costs and interest rates, some more “creative” ways of purchasing a home are increasing in popularity.
If you want to buy a home but can’t afford it, some sellers offer rent-to-own options. This allows you to rent the home for a specified period of time before becoming the owner. The good thing is that you can get a house without having to save for a down payment and you won’t have to qualify for a mortgage immediately.
On the other hand, this makes your rent more expensive because some of the monthly payment goes towards future ownership. If you decide that you don’t want to buy the house or you don’t get approved for a mortgage, you won’t get that extra money back. Plus, even though you’re renting, you’re responsible for maintenance.
Down Payment Loans
Another risky trend is to take out a personal loan to fund the down payment. This is the same as buying a house with 0% down. You borrow the entire cost of the home from two different companies with two different interest rates. Purchasing a home with 0% down is never good. You want to put down at least 5% to 20% of the value because anything less will prevent you from reaching your other financial goals.
Navigate these Trends with an Experienced Agent
Whether you are buying or selling, you can navigate these trends by working with a real estate agent such as the Lafayette Team with EXP Realty. We can help you buy or sell in the Lexington or Lake Murray, SC area, especially if it’s your first time.