The Rollercoaster Ride is Over
The residential real estate market was anything but normal over the past 3 years! Gone are the days of the 3% mortgage interest rates and extreme bidding wars. The coronavirus pandemic set the stage for a turbulent market. Those conditions made it nearly impossible for a home buyer to buy a home unless they had an extra $100k, with little to no inspections for repairs, were practically willing to buy the home in as-is condition and many waived appraisal conditions too.As the dust begins to settle now in 2023, we are transitioning back toward a normalized market. This year we have mortgage interest rates hovering around the 6% range, plus or minus which some economists say will be an average this year, after peaking at 7.08% last November. The Fed’s strategy to raise the prime rate to curb inflation and spiraling out-of-control home prices has been effective. Home prices have cooled down, we are seeing price reductions on homes and more new Active listings coming on the market at lower prices.
”Following the recent mortgage rate surge above 7%, real estate activity and consumer sentiment regarding the housing market took a nosedive. Home price growth continued to approach single digits in October 2022, and it will move in that direction for the rest of the year and into 2023. However, while some housing markets have seen significant recalibration since the spring price peak and likely to post losses in 2023, further deteriorating for-sale inventory, some relief in mortgage rate increases and relatively positive economic news may help eventually stabilize home prices.”, said Selma Hepp of Corelogic. -Selma Hepp, Interim Lead, Deputy Chief Economist for CoreLogic.
Challenges for Physicians in 2023
There continues to be a relative shortage of “resale” home inventory in certain geographical markets. The low inventory is due in part to the current homeowner’s choice to keep affordable mortgage rates they locked in at the historic low rates, lack of purchase power going forward, and uncertain economic conditions. New construction home starts have also declined and are lagging due to coronavirus supply chain issues, labor shortages and lending issues for builders are preventing more construction than we currently see. Although, despite these challenges the market is adjusting to the new norm.“Some housing markets may see an uptick in homebuying activity at the beginning of the year, especially if mortgage rates continue receding from a recent high of 7%. Housing inventory is expected to remain tight in 2023, with housing starts below historical averages and fewer homeowners willing to sell, said NAR Chief Economist Lawrence Yun. The ongoing housing supply challenges will prevent home prices from falling, though price appreciation will slow, he added. “I see many hopeful signs for early next year,” Yun said. -Lawrence Yun, Chief Economist National Association of REALTORS®.
The Silver Lining
There is a silver lining amidst these challenges in the aftermath of the coronavirus pandemic. The truth is we are trending back toward a more balanced real estate marketplace. This is a “sticky time” when home prices are still adjusting downward to the cost of borrowing money, at a higher mortgage rate. Most home sellers realize their home cannot be sold in 2023 for the same price that a neighbor sold a similar model home for in 2022. Some sellers are paying additional fees to ”buy-down” the buyer’s mortgage interest rate. As always, mortgage interest paid, is also deductible on the tax return.Doctor Relocation, LLC at Re/Max Professionals, specializes in physician relocation & real estate services. We understand that most graduating Residents and Fellows are purchasing their first home when beginning a new career. Our nationwide network of “Participating Re/Max Realtors” are educated on how to work with physicians, we understand how to negotiate the physicians-only mortgage loan programs with no down payment options and much more.
“Physician Home Loans are a great option for home ownership, said Sandi Jameson-Frith of Huntington Bank. The Physician Programs offer a wide range of Financing Options for Residents, Fellows, and Attending Physicians. It is always best to speak with your Lender as to the best option for you. Physician Programs come with No Private Mortgage Insurance and No Prepayment Penalties. Rates are dependent on the current market at the time of locking in a rate, as well as credit score and down payment amount”. -Sandi Frith-Jameson, Physician Mortgage Loan Specialist at Huntington Bank.
Most Physician Loans allow for those with an MD, DO, DPM, DDS and DVM Degrees. Sandi and her team are one of the premier physician mortgage loan producers in the U.S. It is best to check with your Lender as to qualification under the physician loan program. We understand how the choice of neighborhoods can be driven by on-call shifts and those demands on a physician. As passionate members of the community, our Realtors understand hospital locations and will introduce our physician clients to the best homes for resale, neighborhoods, school districts, recreation opportunities and community services.
Economists anticipate lower interest rates this spring of 2023, after the beginning of 2024 and again in 2025 at which time homeowners might refinance to a lower rate. The Federal Reserve aims for inflation rate of 2 percent over the longer run. Once the inflation rates have been corrected, mortgage interest rates normally trend to lower numbers and home prices start to climb again. Thus, producing a greater home equity position in the long term. 2023 will be a great year for a physician to purchase a home, while leveraging the physician mortgage loan, a possible rate buy-down paid for by a home seller and while home prices are lower this year!
-This article written by Steve Charlett, Broker/CEO at Doctor Relocation, LLC at Re/Max-January 5, 2023.
Sources of information for this article are Corelogic, NAR and the Federal Reserve.
https://www.corelogic.com/intelligence/u-s-home-price-insights-december-2022/
https://www.nar.realtor/magazine/real-estate-news/2023-real-estate-forecast-market-to-regain-normalcy
https://www.federalreserve.gov/faqs/economy_14400.htm
Please see this article as originally published on PracticeMatch.com at; https://www.practicematch.com/physicians/articles/the-real-estate-landscape-for-2023.cfm.
Steve Charlett | Doctor Relocation, LLC at RE/MAX Professionals | 10111 Inverness Main Street, Englewood CO 80112 | Office (303) 799-9898 | https://drrelocation.com/
