Interest Rates: What You Should Know as A Buyer
What potentially lower interest rates in 2023 mean for our market.
Recently, Fannie Mae announced that they are predicting interest rates will fall to 4.5% in 2023. They didn't say exactly when, and this forecast could change, but this is good news. What will this mean for those looking to buy or sell a home in Washington, D.C.?
Lower interest rates mean demand would likely increase. At the same time, Fannie Mae predicts the number of new homes being built will decrease by at least 15% next year. So demand could increase, and supply could decrease at the same time.
"Declining interest rates will increase the purchasing power of buyers."
This news doesn't really help someone looking to buy a house now, but I think a lot of buyers should proceed with confidence, knowing that their higher monthly payment is temporary. They will likely be able to refinance to a lower rate in the future. That being said, you should definitely discuss this with your lender before making a decision.
Right now, it looks like our housing forecast looks good for 2023. This will keep our current market balanced, which is great. You don't really want to see prices decreasing significantly, even if you’re a buyer. Overall, a balanced market is a healthy market.
So what does this mean in the future? I think that declining interest rates will increase the purchasing power of buyers, and more buyers will look for homes as a result. My prediction is that by the end of 2023, we're back into what is our typical housing environment in D.C., where we have demand exceeding supply and prices increasing.
If you have questions about buying, selling, or anything else, please call or email me. I am always willing to help!