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Keep these in mind if you’re planning to make a big move this year. 

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Many people found that 2022 was a tough year to buy a home. But will 2023 be better? That’s questionable.

Whether you’re looking to buy or sell a home in 2023, it’s important to have a solid pulse on the market. And so it pays to keep these real estate trends in mind, as explained by Dave Ramsey.

1. Housing inventory is picking up, but is still low

A big reason many people struggled to buy a home in 2022 was that there wasn’t a lot of inventory to go around. This year, inventory could pick up a bit, but there likely won’t be enough homes on the market to fully meet buyer demand. That’s a great thing for sellers, but for buyers, not so much.

If you’re hoping to buy a home in a market where inventory is limited, be prepared to make an offer as soon as you see a suitable property that fits into your home-buying budget. Also aim to be flexible with your must-haves. Compromising a little could go a long way in a market like this.

2. Home values are still rising, but at a slower pace

Ramsey says the national median home price for active listings increased by 11% to $416,000 in November 2022 compared to a year prior. But in June and July of 2022, home price gains came in much higher at 16%.

What this means is that home prices are still up, but gains are slowing down. That means those looking to sell a home in 2023 may not want to wait.

Because home prices are still up, it’s important to know how much house you can really afford. Generally speaking, sticking to the 30% rule will help you avoid going overboard. That rule states that your total predictable monthly housing costs should not exceed 30% of your take-home pay. And those housing costs should include your mortgage payment, property taxes, and homeowners insurance at a minimum.

3. Mortgage rates will remain high

Mortgage rates rose sharply in 2022 and are still high. That means you need to be really careful about sticking to your price range when buying a home.

Now, there are things you can do to snag a lower interest rate on a mortgage in 2023. These include boosting your credit score and signing a 15-year mortgage if you can afford the higher payments that come with one.

Some buyers may get spooked by higher mortgage rates this year. But remember, if you can afford your housing payments based on today’s rates, you can always refinance to a lower rate once it becomes less expensive to borrow.

4. Online real estate services are growing

There are different online services that can buy and sell your house for you, explains Ramsey.

Third-party buyers like Opendoor will purchase your home outright so you don’t have to deal with the usual selling process that involves having potential buyers invade your home to scope it out. But you might lose out on a higher profit if you go this route, so be careful, and do your research before diving in.

Ramsey says we’re also likely to see digital closings remain an option for buyers in 2023. These became more widely available during the pandemic, and they’re actually a good thing, because they can make the process of closing on a home loan more convenient.

5. Risky buying options are more accessible

In today’s housing market, there are some lesser-known ways to overcome affordability issues. But they come at a major drawback.

Ramsey points to rent-to-own arrangements as one prime example. These setups make your rent more expensive because a portion of your monthly payments goes toward future homeownership. But if buying the home you’re renting to own doesn’t work out, you end up losing out financially by virtue of having paid more rent all those months.

Another risky real estate trend Ramsey cautions buyers to avoid is taking out a personal loan to cover a home down payment. As Ramsey puts it, that’s the same as buying a home with 0% down. And that means you’ll have two different monthly loan payments to deal with and work into your budget. If you don’t have any funds to bring to the table for a down payment, it could be a sign that you’re not financially ready to buy.

Ramsey is clearly pretty tuned in to today’s housing market. And if you’re looking to buy or sell in 2023, it pays for you to do the same.

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