Last Updated on October 2, 2023 by Luke Feldbrugge
Welcome to the Housing Market Trends October 2023 monthly update from Homes for Heroes. This report focuses on the residential real estate housing market. We listen to the experts and boil down what they have to say to assist you, our heroes, with decision making regarding buying a home, selling your home, or refinancing your mortgage.
Housing Market Trends for October 2023
- It remains a sellers market as inventory is far below the normal level and housing prices continue to tick upward, allowing sellers to get top dollar for their home with less contingencies.
- Buyers are still struggling to find a home that has all they need, at a price they can afford.
- Mortgage rates remain above 7 percent for a 30-year fixed mortgage, and this is causing hesitation from both buyers and sellers to enter the market.
Housing Market Trends October for Buyers
Why is the Number of Homes Available So Low?
Low home inventory is one of the biggest challenges for home buyers in the market or for those considering entering the market. Simply put, home inventory has been below for a while. That said, inventory levels are up year-over-year in 2023 and the trend has continued to climb since the record setting low in 2021.
There are two primary reasons why the number of homes available to buy is so low:
Home builders dramatically decreased the number of units being built during the 2008 recession and they have slowly been increasing their annual unit production since 2012. The good news is, builders of new housing units nearly reached their average annual output level (average between 1970-2022) for the first time since 2008. This positive trend has certainly helped.
The other factor affecting our current low home inventory is homeowners are choosing to stay in their homes longer. From 1985 – 2009, homeowners stayed in their home an average of 6.1 years. Whereas, from 2010 – 2022, homeowners have stayed in their home an average of 9.3 years.
One recent contributing factor is the homeowner who purchased their home over the past few years, who had the benefit of record low home mortgage interest rates. Many of these homeowners locked their mortgage under a 3 percent interest rate.
For these homeowners, choosing to sell their current home and then trying to buy another home in a market with limited inventory, higher prices per square foot, and mortgage interest rates above 7 percent does not make sense. So, many are choosing to stay where they are.
Now for some good news!
New listings, or homeowners putting their homes up for sale, actually increased the month of August. It’s still down -7.5% year-over-year, but seeing an uptick in August is not a normal occurrence as you can see in the chart below since 2017. Hopefully this is a positive sign of things beginning to improve.
The other good news is inflation continues to drop, and that’s a good thing for everyone because that eventually will lead to more cash in all of our pockets.
Generally speaking, this drop in inflation should bring home mortgage rates down. Given the trend line of inflation Consumer Price Index (CPI) vs the 30-year fixed mortgage rate shown in the graph below, you can see interest rates tend to lag behind inflation, but eventually moves with it.
Many experts believe home buyers should see a slight decrease in mortgage rates by the end of 2023, and into the mid-6% range by mid-2024.
Home Values Will Continue to Increase
Many home buyers were hoping to see a significant home price decrease, but more and more Americans are now realizing that home prices are not likely to go down any time soon.
The bar graph below shows how the percentage of Americans who believe home prices will go down in the next 12 months has continued to decline from 37% in January to 24% in July.
Even the experts agree that home prices will continue to increase well into 2027, according to HPES.
Housing Market Trends October for Sellers
So what do all of these housing market trends mean for the average home seller? Well, if selling your home is all you need to do, there have not been many better times to do it then in the last two years.
If you follow your local market trends, you’re likely to get the price you want for your house, and maybe even more. And because inventory remains extraordinarily low, there will likely be multiple homebuyers who will bid on your home; likely giving you top dollar for your home with far less contingencies to deal with.
If you would like to get moving on this, simply sign up to speak with your local Homes for Heroes real estate specialist and let them assist you with the sale of your home and save you an average of $3,000 after closing.
The main issue faced by some homeowners who want to take advantage of this opportunity and sell their home, is they still need a new home to live in after the sale of their current house. And, the difficulty of finding another home, at an affordable price, with a manageable mortgage interest rate has kept many potential home sellers away from selling.
But, if finding a new place to live is not a major roadblock for you right now, this is a good time to put your home on the market to capitalize on the higher price point and less contingencies from potential homebuyers.
Does it Make Sense to Refinance Now?
Even with interest rates above seven percent, there are some instances where it may make sense financially to refinance your existing home mortgage.
However, it is important to carefully consider your options before choosing to go through with any refinance to assure you are helping your financial situation over the long term. And, remember to consider the closing costs and fees associated with a refinance.
Sign up to speak with your local Homes for Heroes mortgage specialist to find out if refinancing makes sense for you. If you decide to work with them, they will save you money by reducing their fees.
Here are some reasons why refinancing may make sense for you, given the current housing market trends:
- Lower Monthly Mortgage Payment – If the current interest rate has fallen below your original mortgage interest rate (for the same type of mortgage), you may be able to refinance to a lower interest rate and reduce their monthly payment.
- Shorten Your Loan Term – By refinancing to a shorter loan term, you can pay off your mortgage sooner and save money on interest over the life of the loan. Although, you can simply increase the amount you pay each month, or make an additional mortgage payment occasionally and apply these extra amounts to your principal to reduce the amount of interest you pay over the life of the loan as well. Research what works best for your personal financial situation before going through the process and the expense of a refinance.
- Eliminate Private Mortgage Insurance (PMI) – PMI is a required payment for borrowers with less than 20% equity in their home. If your home value has increased since taking out your original mortgage, you may be able to refinance to a loan with a higher loan-to-value ratio and eliminate your PMI payments.
- Consolidate Debt – A cash-out refinance allows you to borrow against the equity in your home to pay off other high-interest debt, such as credit card debt. Or, it can be used to pay for renovations, repairs, or other improvements to your home.
- Switch Loan Types – For example, if your current mortgage is an adjustable-rate mortgage (ARM), you may want to refinance to a fixed-rate mortgage to avoid future interest rate fluctuations.
Receive an Average of $3,000 from Homes for Heroes
Homes for Heroes assists firefighters, EMS, law enforcement, active military and veterans, healthcare workers and teachers; buy, sell and refinance their home or mortgage. But if you work with their local real estate and mortgage specialists to buy, sell or refinance; they also provide significant savings after you close on a home or mortgage. They refer to these savings as Hero Rewards, and the average amount received after closing on a home is $3,000, or $6,000 if you buy and sell!
Simply sign up to speak with a member of the team. There’s no obligation. After you sign up they will contact you to ask a few questions and help you determine the appropriate next steps for you. When you’re ready, they will connect you with their local real estate and/or mortgage specialists in your area to assist you through every step and save you money when it’s all done.
It is how Homes for Heroes and their local specialists thank community heroes, like you, for your dedicated and valuable service.