November 9, 2022
Some market watchers are asking the question–is it possible we will see house prices fall in 2023? Indicators from Federal National Mortgage Association or Fannie Mae point to a cooling-off period for home prices next year.
Earlier in 2022, Fannie Mae forecasted home price growth at over four percent in 2023; those numbers have since been revised. The expectations in the last three months of 2022 now tell a different story:
Fannie Mae now expects home price declines of as much as 1.5% in the coming year.
What created the 2022 seller’s market in the first place? Rising equity, a shortage of housing inventory, and high demand were all contributing factors.
And as mortgage rates started approaching 7%, the motivation to buy seems to be tapering but it may take well into the new year before prices truly begin to return to pre-seller’s market levels.
Fannie Mae anticipates the second quarter of 2023 as the time growth of home prices will decline (compared year-over-year) so as the nation gets warmer in 2023, the housing market may get cooler.
While it is true that home prices and interest rates have the potential to fall in 2023, should you delay your home loan application?
Does it make sense to wait? Some do not have the option to hold out until conditions improve, but current indicators seem to point toward improvement next year. That can create an artificial dilemma in the minds of some.
It makes sense to anticipate the future, but if you NEED to buy now, it’s best to look for the best deal and plan ahead for when conditions are more favorable with regard to interest rates.
If you are considering a new home loan in 2022, it is more important than ever to shop around for the best lender, the most affordable terms, and a mortgage that you can realistically afford.
For some borrowers that means applying for an adjustable-rate mortgage to buy or refinance a home; these loans often come with competitive interest rates that may be lower than the current fixed-rate FHA loan.
But that rate is only an introductory offer–the rate will be adjusted once the introductory period ends, typically in a year, three years, or longer.
Smart house hunters plan an ARM loan strategy–you will want a plan for how to deal with your mortgage once your teaser rate expires.
Ask a loan officer whether there is an option to get an ARM loan with a longer teaser rate–you may find FHA ARM loans have an intro rate lasting seven or up to 10 years.
Discuss your home loan options with a participating FHA lender; be sure to compare ARM and fixed-rate hoe loan options to see which type of loan might make the most sense based on your need.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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