Every seller’s market does eventually have an end. Now, it appears that in certain areas, the market pendulum might slowly but surely be swinging back in a buyer’s market direction. So is it a buyer’s or seller’s market?

Most experts see the U.S. turning into a buyer’s housing market in 2023.

The U.S. housing market will shift in favor of home buyers by the end of 2023. That’s according to 44% of the 107 economists and housing experts surveyed by real-estate company Zillow.

The real estate market across the country is beginning to shift, but in Florida, that shift is already well underway. A year ago, the Florida real estate market was red hot. Competition for homes was high, as demand for housing was through the roof while inventory trailed significantly. The fact that mortgage companies were offering record-low interest rates at the same time sent home prices soaring, and reduced time on the market to mere days.

While the average 30-year fixed-rate mortgage had a 3.07% interest rate in October of 2021, it increased all the way to 6.90% in October 2022

A $300,000 mortgage with a 3.07% interest rate would result in a monthly principal and interest payment of around $1,276. That same mortgage with a 6.90% interest rate would carry a monthly principal and interest payment of $1,976 — $700 more!

The only way for home buyers to compensate for that increase in interest rate is to buy a less expensive home. But, if home prices aren’t dropping the result is these buyers are staying out of the market entirely. That will reduce demand, which will slow sales and eventually force prices to come down. Buyers who are still in the market could take advantage of these dropping prices and less competition to get a good deal. Then, when the interest market settles down, patient buyers could benefit from a mortgage refinance that sets them up nicely from a financial standpoint.

Is it a buyer’s or seller’s market?

Time will tell, as it always does, but we thought we’d take a look at some signs that today’s market may be shifting. The biggest positive for buyers is that inventory increased in 39 of the 50 largest U.S. metros compared with last year. Inventory is starting to increase, and the extraordinary rate of rising prices is cooling down.

Price reductions are on the upswing

Overall, U.S. housing prices are still rising. But there is some hope to be found in the fact that the number of price reductions on homes is increasing. In other words, homes might be listed high, but they’re having to be reduced in order to sell.

Mortgage applications drop

It’s simple: The fewer people applying for mortgages, the fewer buyers that are willing to make an offer on a home.

Mortgage Rate Adjustment

As inflation shows signs of moderating, 30-year mortgage rates are inching closer to the 6% mark, dropping to 6.15% on Jan. 19th, 2023, according to the Freddie Mac Primary Market Mortgage Survey (PMMS). That’s the lowest mortgage rates have been since September 2022.

Given recent encouraging news around inflation and a corresponding drop in the U.S. Treasury yields that help set mortgage rates. The good news for buyers is that a sustained inflation drop could push mortgage rates into the 5% range late in the second quarter or in the second half of 2023, but that’s definitely not guaranteed.

In conclusion, the market is constantly shifting and that means so are opportunities. It’s important to stay informed to strategize your next investment. Patient and calculated but don’t hold out for perfect scenarios. Today’s market has unique opportunities like all others, with knowledge comes your ability to make better decisions and the information tells us that today’s market shows positives for both buyers and sellers. The big difference we see is that buyers that were holding out will now have their opportunities to get back in the market. The market will stay hot!