While increased interest rates have significantly shifted the Real Estate market and in some cases, led to decreased home prices over the past six months, it is not likely that home prices will continue to drop to the affordable level that buyers are hoping for. The continued pressure of low housing inventory across the nation leaves us in a similar position as in past years, with more demand than supply, which typically causes home prices to increase. But how will the higher interest rates make 2023 different from 2021 and 2022?

Lawrence Yun, Chief Economist at the National Association of Realtors (NAR) states that “After a big boom over the past two years, there will essentially be no change nationally” in regards to home prices in 2023. Similarly, “... even though home prices remain high year-over-year (YOY), they’re not as eye-popping as they were in early 2022. But how far home prices dip in 2023 will likely depend on where mortgage rates go.” wrote Robin Rothstein, Forbes Advisor Staff.

In Boulder County, after hitting a record low number of new listings in December 2022, we are now seeing nearly twice as many new listings in January. “It seems we have already reached the bottom of the low home sales activity, and with mortgage rates stabilizing near 6%, we expect the housing market to turn around in 2023 … and rebound in 2024” said Nadia Evangelou, senior economist and director of forecasting at NAR.

Historically, mortgage rates between 4%-6% have been very common which may indicate we are indeed restabilizing, and acclimating to a more typical market. With rates below 4% during the past two years, this is an adjustment period for both buyers and sellers. In December NAR predicted 2023 mortgage interest rates to hover around 6%, and then drop below 6% in the second half of the year.

For sellers, during this time, it is important to work with a trusted agent who will price your home competitively, and who has comprehensive knowledge of the area. While the market may still be tipped in the seller’s favor, it is always important to present your home as well as possible when selling. Through careful staging and decluttering, your agent can help make it easy for a buyer to imagine themselves living in the space. She can also help you get familiar with all the important systems of your home, including your roof, furnace, and water systems, and can arrange for a pre-inspection, so that there are no unfortunate surprises after you are under contract.

For buyers, while you may experience more breathing room as far as competition goes, you are still facing limited inventory and higher interest rates. Make sure you have a good team! Choose a realtor and a lender who understand your situation, and can advise and advocate for you throughout the buying process. Rate buydowns, adjustable rate mortgages, and creative financing options are all available now in this changing market.

There is always a path forward!

Emma Quarterman can be reached at 303-506-5218 or by email at emma@livewestrealty.com. Check out her website at emmaskycolorado.com/.