Business View Magazine May 2023

13 BUSINESS VIEW MAGAZINE VOLUME 10, ISSUE 5 This would be a major change of pace from the frenzy of the past few years. “From April 2020 to March 2022, sellers were able to put their properties on the market, kick their feet up and wait for a buyer to beg them to accept an offer,” he said. “That time is long gone.” He said the last two quarters were filled with sellers being too stubborn to accept price drops and buyers too scared of high interest rates to make offers. However, he predicts 2023 will be a year of corrections. “Sellers will come back down to reality and buyers will start to realize a 5% interest rate isn’t really that bad,” he said, “opening up the market for regular transactions from FHA, VA and standard conventional loans.” RATES WILL CONTINUE TO INCREASE If you are hoping rate hikes will stop in 2023, that probably won’t be the case, said Marco Smith, a real estate agent with Long & Foster Real Estate in Maryland. He predicts rates will slowly rise throughout the year. “Depending on the buyer’s credit, mortgage rates will remain in the mid-6% range,” he said, “later climbing to a maximum of 8% in June or July.” However, his prediction isn’t all bad news. “When rates go up, prices go down,” he said. “Because rates are rising slowly, housing prices will drop, but not significantly. This won’t help ease inventory concerns, but should increase sales.” Smith isn’t quite sure when he expects rates to go down. “It’s hard to predict mortgage rates with any certainty,” he said, “but I see rates hovering between 6% and 8% for most of the year. By year’s end, we may see rates decrease.” BUYERS WILL WARM TO HIGHER RATES “Over the last 40 years, the average mortgage rate has been 7%,” Smith said. “People will realize we were spoiled with unsustainably low rates and will become less nervous about buying under current interest rates.” Still not sold? He has a different perspective to consider. “One way to think about this is: If you were renting, you paid 100% interest rates,” he said. “Once mortgage rates start to become consistent, renters will choose to buy and sellers who were on the fence will finally put their homes on the market.”