Before we look at 2023, let’s start off with a recap of 2022. The real estate market in Annapolis ended with a pause in activity. It’s normal to see home sales trend lower during winter months as home buyers and sellers shift their focus to the upcoming holiday season. However, we know that seasonality wasn’t the only reason the market slowed.
- Interest rates reaching 7% changed the game around affordability, making mortgages for Annapolis homes slightly more expensive.
- Home buyers also confronted the stark reality that their dream home suddenly felt slightly out of reach.
Buyer enthusiasm dropped as they took a step back to assess if owning a home was still their best move or if waiting to “see what happens” in Annapolis real estate was the better play.
The homebuyer pause also caused home sellers to tackle a slowdown in showings and offers, and adjusted home sale prices became a selling strategy we hadn’t seen in years.
2023 kicked off with a more balanced approach to the market. Homebuyers and sellers alike selected to settle into the new reality that increased interest rates will be with us for the foreseeable future.
The good news is that rates have leveled off, (mortgage rates are expected to plateau at about 6.4%) allowing for some planning and less volatility when buying or selling a home.
Buyers have regained a more optimistic viewpoint about buying homes once again, as they’ve started to see more homes reduce their prices in order to combat interest rate increases. The increased days on market has also offered breathing room for buyers to make more sound investing decisions.
Home sellers in Annapolis are less frantic too. They understand their home will need to spend a little more time on the market than before, and they’re working hard to put their best foot forward by providing the market with well-cared-for homes (something that’s desperately needed in any market.)
Home sellers in Annapolis are leaning in once again to hire an experienced real estate agent in the area; as they seek time-tested advice around go-to-market pricing decisions.
3 TRENDS TO LOOK FOR IN 2023
As the Anne Arundel County housing market returns to normal, there are three things home buyers and sellers should expect in the upcoming year:
1. Buyers will regain their confidence to afford a home.
Mortgage lenders are tackling the new spike in interest rates by opening up their toolbox with proven loan programs to enable sellers to buy down these rates for homebuyers.
Over the last few years, sellers were unwilling to offer any kind of buyer concessions. In our current market, buyers can expect to ask their agents to negotiate closing cost assistance so lenders can reduce their interest rates and help improve their monthly mortgage payments.
2. The lack of inventory will continue.
The lack of housing inventory, and particularly affordable homes, will continue to be a pressing issue for Annapolis home buyers and sellers. There still need to be more houses on the market to support the number of people who need them; especially at the most economically affordable price points.
3. Home prices will adjust but not how you think
While some experts like to lead with fear, projecting home price drops as high as 7.6%, we don’t expect that will be the case. For example, The National Association of Realtors is taking an opposing stand, with projections that home prices will increase in 2023 by 1.2%.
In our experience, the real estate market in our area should expect to see homes going to market at prices that align with actual, current market value instead of previously inflated prices due to the insane demand.
Owning a home is always a good idea as it allows you to control your monthly expenses and create long-term wealth by building equity. If you are planning on buying or selling in 2023, let’s talk now. Contact me today!