Predicting the future of the housing market may not be straightforward, but there are certain indicators which can assist both the real estate buyer and Glasgow property agency in understanding where things may be heading and they are not just lesislative or economical.

Mortgage rates have seen significant drops compared to 2022, providing good news for homebuyers.

person handing keys to a person with cash

Home Prices

At present, the housing market is predominantly buyer-controlled; buyers are in control of transactions. However, high mortgage rates have slowed the market and reduced demand for homes; as mortgage rates rise further and further back, we can expect this market to become seller-centric again.

Even with rising mortgage rates, home prices have not dropped significantly; instead, current housing market forecasts indicate an expected increase through 2024.

Higher interest rates have dampened homebuyer demand, yet the supply of available homes remains limited. Buyers are gradually gaining back some leverage in the market; however, sellers’ reluctance to reduce prices will prevent a complete shift of power away from buyers until next year.

Recent survey of NYC real estate agents indicated that the market has softened since its peak. Three out of five agents noted that buyers were taking longer to consider properties before making offers below the asking price – good news for potential homebuyers searching within budget constraints.

Higher mortgage rates and decreasing demand have combined to make homes less affordable, particularly for buyers with imperfect credit profiles. According to Black Knight’s report on subprime approvals during Q1 2023, approval rates fell approximately 10 percentage points compared with Q1 2022.

As a result, buyers are beginning to look beyond New York City and its suburbs for affordable homes – particularly buyers looking at luxury properties – in search of something they can afford. In the second quarter alone, contract signings for condos/co-ops over £4 million fell by 24% year over year.

Although the housing market may have fallen from its spring highs, it remains far better than what it was ten years ago. Over the past two years, home prices have seen significant gains; according to the Case-Shiller index’s estimates, they increased an average of 18.6 per cent during the pandemic – this being highest year-long increase since 2006. Furthermore, rental asking prices have also seen substantial increases and are now well above pre-pandemic levels.

Mortgage Rates

Mortgage rates have seen a steady increase over the last several months, impacting housing market trends and homebuying decisions. Sales of existing homes actually decreased during March – which according to Fannie Mae can be linked back to surging mortgage rates that make homeownership more costly.

At one time, low mortgage rates and surging home prices created an ideal environment for purchasing a new house. Unfortunately, due to economic turbulence and rising interest rates as well as uncertainty regarding future prospects a number of prospective buyers are now concerned about whether or not they can afford a mortgage at these increased rates.

Due to an increase in mortgage rates, fewer people are seeking to refinance their current loan, since homeowners may be unwilling to give up low rates in favour of much higher ones that have recently been introduced. A decline in home prices may convince some individuals to reconsider refinancing.

Even with rising interest rates, there are signs that the housing market could recover in 2023. The supply of available homes for sale has increased, which bodes well for its future recovery; additionally, the typical Glasgow property agency is becoming more willing to list their homes for sale and increase inventory levels further.

Overall, the housing market is currently in transition with real estate professionals expecting it to gradually decrease this year; however, most firms don’t predict another housing market crash like in 2008 nor any serious recessions.

At present, a healthy housing market requires stable economic growth and job creation. Without these essential ingredients, the housing market may continue to falter; many prospective buyers could remain on the sidelines until mortgage rates and home prices begin decreasing again.

Buyers

Homebuyers could become wary of buying in 2023 due to inflation putting financial strain on them, posing a threat to the housing market as homebuyers drive it and homes sell quickly in hot markets where competition for properties can be intense.

Home prices haven’t experienced the same surge as they did during the pandemic due to buyers holding off purchases during this time, possibly because of lack of space in existing homes or fear about COVID-19 stressors – thus slowing market activity significantly in key locations.

Now that the pandemic has mostly passed and mortgage rates have increased slightly in 2022, potential buyers are beginning to return to the market – possibly at more reasonable prices due to reduced demand.

Also, rising interest rates might help curb speculation of an imminent housing bubble, further weakening the market. In the past, such speculation often resulted in sudden mortgage rate spikes and home price jumps – something potential homebuyers should avoid at all costs.

Home buyers could gain more awareness of the costs involved with owning a home. They might realise, for instance, that higher mortgage rates mean thousands in interest over time and even low mortgage rates can add up and make saving for a down payment challenging.

Though these housing market trends may appear dismal, it’s important to keep in mind that no one knows with absolute certainty what will occur next. Therefore, the best strategy for you may be researching the market thoroughly and selecting what’s most suitable for your personal circumstances.