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What does March have in store for buyers and sellers? Read on to find out. [[{“value”:”
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If you’ve been trying to break into the real estate market for quite some time without any luck, you’re not alone. For several years now, buyers have had to deal with the unfortunate combination of elevated home prices and expensive mortgages.
And sellers have been stuck, too. Many people refinanced existing home loans when mortgage lenders lowered their rates tremendously in 2020 and 2021. Now that mortgage rates are notably high, homeowners in that boat may be loath to give up their low rates.
But will things get better in March? Probably not, unfortunately. Here’s what may be in store for the coming month.
1. Mortgage rates could continue to rise
As of the week ending Feb. 22, mortgage rates have inched upward for three weeks in a row. They’re now sitting at 6.90%, on average, for a 30-year fixed term.
That’s disappointing for home buyers, because in January, mortgage rates dipped for a bit of time. If things continue the way they’ve been for the past few weeks, come March, mortgage rates could top 7%.
Of course, there are steps you can take to eke out some savings on a mortgage. These include shopping around with different lenders to compare offers and boosting your credit score (which you may be able to do fairly quickly by correcting credit report errors and paying down existing credit card debt).
But even with strong credit and savvy rate-shopping, the amount of savings you’re able to snag may be limited. So it’s important to be prepared for a higher interest rate on your mortgage either way.
2. Inventory may rise a bit, but there still won’t be enough homes to meet buyer demand
In January, there was a three-month supply of homes on the market, reports the National Association of Realtors (NAR). But since it often takes a six-month supply of homes to meet buyer demand in full, there’s a good chance the real estate market will continue to have a shortage in March, even if listings pick up in anticipation of a spring rush.
For context, spring is a popular time to sell (and buy) a home. And some sellers may opt to get ahead of that rush by listing in March. But even if inventory increases substantially, it’s unlikely that we’re going to go from a three-month supply of homes in January to a six-month supply such a short while later.
As a buyer, you may have to compromise on certain features if you’re intent on purchasing a home in March. As a seller, it’s a good time to list due to limited competition. And if you’re anticipating making enough money from the sale of your home to buy your next one in cash, you’re in a good spot.
But remember, if you’re selling your home and intending to finance a new one with a mortgage, you may end up with a rate you’re not happy about. So don’t automatically rush to sell just because inventory is low.
3. Home prices will remain elevated
In January, the median existing home sale price was $379,100, according to the NAR. That’s a 5.1% increase from January 2023.
Since inventory is unlikely to increase notably in March, we shouldn’t anticipate a big shift in home prices. They may wiggle upward or downward ever so slightly, but all told, don’t expect any major movement.
You’ll need to crunch your numbers carefully to make sure you can really afford to buy a home today. As a general rule, it’s a good idea to keep your housing costs to 30% of your take-home pay or less. And that 30% shouldn’t just account for your mortgage, but rather, your property taxes, homeowners insurance, and other recurring housing costs as well.
Don’t bank on March being a great time to buy or sell
So clearly, the bad news is that March is shaping up to be a not-so-great time to sell or buy a home. But that doesn’t mean things won’t change in time.
Eventually, mortgage rates are likely to fall, which could spur an uptick in listings and inventory. From there, home prices could start to drop to more moderate levels.
But the key word here is “eventually.”
If you’re tired of waiting to buy a home and can afford one at today’s prices and mortgage rates, then you may want to move forward. Otherwise, don’t despair.
The same holds true if you’re a seller who’s looking to make a change. It may not be the optimal time to list a home due to the challenges you might face in buying your next one. But if you’re able to sit tight, you may find that in a year from now, you’re looking at a very different housing market.
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