Competition was fierce in the housing industry in 2020 and 2021. Investors rushed in to take advantage of historically low mortgage rates, leaving many would-be first-time buyers out for the count. But what about the situation now? Is the state of the market finally shifting in favor of first-time homebuyers? Even though home prices have remained high, is competition finally calming down? Here’s what you need to know.
Will There Be Less Competition for First-Time Homebuyers in 2023?
The last few years have been somewhat of a roller coaster for first-time homebuyers. At first, excitement grew over historically low mortgage rates and many renters were able to take advantage of the situation and finally become homeowners. Then, as inventory grew tight, the competition grew intense, and bidding wars followed soon after. As a result, many prospective first-time buyers became priced out and had to put their dreams on hold.
But now, are the tables finally turning? Will we see a decrease in competition in 2023? According to recent trends, the answer is yes, it’s quite possible.
The number of mortgage applications being submitted right now is significantly lower than last year. Recent data shows that there has been a year-over-year decrease of about 41%. Fewer people applying for loans usually means there are fewer people buying. So, yes, it’s quite possible that if this trend continues, buyers will see less competition in 2023.
Additional Benefits of Buying a Home in 2023
If you’ve been thinking about buying your first home but have been waiting for the right time to make your move, 2023 could be your year. In addition to decreased competition, prospective homebuyers may be able to look forward to other benefits in 2023 such as:
Housing inventory is likely to remain low in 2023, but it’s steadily improving. That means prospective homebuyers may be able to be more choosy with their purchase and have more options available to them.
Mortgage rates remained high throughout 2022. Now, homebuyers who were patient and waited out the situation may see their efforts rewarded. The Mortgage Bankers Association predicts that rates will drop to about 5.4% by the end of 2023.
More Negotiating Power
In 2020 and 2021, buyers had little negotiating power because the majority of sellers were receiving multiple home offers. However, with fewer offers being made, buyers may find themselves at more of an advantage. More negotiating power means being able to take actions like requesting repairs, obtaining a home inspection, and asking the seller for closing cost assistance.
Looking to Buy in 2023?
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