What Can We Expect with Mortgage Rates and Home Prices?

Now that 2023 is within sight, you may be wondering what will happen in the housing market next year and what that may mean if you’ve been thinking about buying a home.

Mortgage Rates Will Continue To Respond to Inflation

Mortgage rates have skyrocketed this year as the market responded to high inflation. The increases we’ve seen were fast and dramatic, and the average 30-year fixed mortgage rate surpassed 7% at the end of last month. In fact, it’s the first time they’ve risen this high in over 20 years.

Because we’re in unprecedented territory, it’s hard to say with certainty where mortgage rates will go from here. Projecting the future on this is far from an exact science but experts agree that we can expect mortgage rates to continue to respond to inflation. If inflation stays high, mortgage rates likely will too.

Home Price Changes Will Vary by Market

As buyer demand slowed this year in response to higher mortgage rates, home prices have moderated in many markets too. In terms of next year’s forecast, expert projections are mixed. The general consensus is home price appreciation will vary by local market, with more significant changes happening in previously overheated areas. Some areas may still see slight price growth while others may see slight price declines. It all depends on other factors at play in a certain market, like the balance between supply and demand. 

Denver Market Update

As the Denver market normalizes, active inventory declined slightly to 7,290 homes on the market at month’s end. However, the current inventory is still less than the pre-pandemic inventory numbers of 8,557 active listings in October 2019.

Inflation, rising interest rates, and the time of the year lead to a decrease in the number of closed properties by 31.52% compared to October. However, with the skyrocket of home prices over the last two years, the market is still well ahead of historical appreciation metrics.

Median days on the MLS continue to increase, up 240 percent from five days last year to 17 days this year. Many homes on the market are still priced based on peak market activity which the market is rejecting thus, increasing days on the MLS. A lot of these properties were either taken off the market or the prices were reduced before ultimately selling. 

If you or anyone you know want to stay up to date with home prices and mortgage rates, reach out and send me a message.