Homebuying Outlook for 2023 Mixed as Potential Buyers Weigh Prices, Rates and Availability

Homebuying Outlook for 2023 Mixed as Potential Buyers Weigh Prices, Rates and Availability
Topics Mortgage Rates

As we enter the 2023 spring homebuying season, the market is much different than it was a year ago, and even more so from the post-pandemic housing rush that saw record high demand and prices while mortgage interest rates reached record lows.

These phenomena spurred many first-time homebuyers to jump into homeownership, while others upgraded to larger homes or refinanced to get lower rates for the long term.

A new WSFS Mortgage Study found that while more than one-quarter (28%) of Greater Philadelphia and Delaware region residents are currently discouraged from searching for a new home due to the economic climate, one-third still plan to look for a new home this year.

Mixed Feelings and Plans
Discouraged regional homebuyers cite home prices (65%), mortgage rates (57%), and recession concerns (41%) as reasons to hold off on their home search this year, but four in 10 (42%) of those who are likely to search for or buy a new home this year believe there are available homes they want and 37% expect mortgage interest rates to decrease.

These are important factors to consider for homebuyers who were previously shut out of the homebuying market due to historic levels of demand driven by low rates and people’s desire for more space during and after the pandemic.

While we aren’t going to see mortgage rates at those levels anytime soon, there are several indicators that rates will stabilize. If you continued saving toward a home despite previous frustrations, you may be rewarded this year with less competition for the home you want.

Looking for Clarity and Help
When asked to choose what they want from a mortgage lender, nearly half (44%) of regional residents selected lower service fees as their top priority, with transparency on all-in purchase cost (41%), homebuyer assistance programs (39%) and a quick and easy pre-approval process (37%) also ranking high.

The study found that awareness of homebuyer assistance programs varies, however, potentially highlighting gaps among different populations. Forty-five percent of minorities report having considered homebuyer assistance compared to 26% of white buyers, with more men (44%) than women (29%) considering these programs and 14% of women having never heard of homebuyer assistance compared to 7% of men.

There are many local, state and federal programs designed to help homebuyers with upfront costs, such as down payment and closing expenses. It is important to do your research, but it is equally, if not more important, to work closely with your lender and realtor to identify programs you may be eligible for.

Knowledge truly is power in homebuying, and so is having the right lender and realtor advising you on these funding options and others, like the WSFS Bank Down Payment and Neighborhood Opportunity programs, to provide access to money and better home affordability.

Click here for more details on and findings from the WSFS Mortgage Study.

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