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What to expect of the housing market when buying a house in 2023

No matter what’s happening in the world, there’s one thing that always influences individual buyers, businesses, and the whole economy.

The housing market.

So, if you’re thinking about making any kind of larger purchase in 2023, you might want to start by taking a look at what the housing market is doing.

In the US, the housing market is facing serious challenges like increased mortgage rates, rising affordability issues, and limited inventory. If you know how to fight these challenges as a prospective homeowner – or even as a real estate professional – I may have the insights that can help you make smart financial moves in 2023.

Increased Mortgage Rates

We’ve already seen it happen a few times over the past couple of months, but one of the big challenges home buyers will continue to face in 2023 is increasing interest rates on mortgages. Over the last few years, interest rates on mortgages have only gotten higher due to changes in economic conditions and monetary policy decisions put out by central banks.

Higher mortgage rates directly impact home affordability for buyers.

As mortgage rates go up, monthly mortgage payments get bigger, making it harder for families to afford any kind of house. This means that potential buyers have to not only alter their expectations for the kind of home they can afford, but even then they may be priced out of the market entirely.

Moreover, increased mortgage rates also have serious effects for real estate investors and other professionals in the real estate industry.

Higher borrowing costs make it harder to finance investment properties and impact returns and cash flows negatively. Investors need to carefully analyze the potential impact of rising mortgage rates on their investment strategies and assess whether adjusting rents or property values is necessary.

Other professionals in the real estate industry also suffer from rising costs because it makes it harder for buyer’s agents, seller’s agents, brokers and other professionals to close deals. This makes it harder for the average working person in the real estate world to make an income.


Another challenge faced by both prospective home buyers and real estate investors is the increasing cost of housing in 2023.

Two people moving into a rental. They cannot afford to buy a home so get a rental as a short term solution because of the housing market
Two people moving into a rental. They cannot afford to buy a home so get a rental as a short term solution.

Home prices have been heading nowhere but up over the past few years. This has been caused by a few different factors like low inventory, high demand and booming population growth in certain areas.

For first-time homebuyers, all of this just makes it harder to live in and buy a home.

Even without high interest rates on mortgages, higher purchase prices make it even harden for first-time home buyers to get a foot in the door and find any kind of home because as the overall cost of living rises, home buyers will have to save more money to be seen as competitive in the market, while they also have a harder time saving money.

On the other hand, real estate investors can find more opportunities in the rental market.

Like I said, with homes being too expensive for normal people to buy, there’s a rising demand for rental properties as a temporary solution. Investors only take advantage of this by buying up more properties to grow their portfolios and targeting high-demand rental markets.

There’s No Inventory

Inventory presents yet another roadblock for the 2023 housing market.

A combination of factors such as population growth, lack of new construction, and homeowners choosing not to sell (due to price uncertainty and variable interest rates) may contribute to this shortage.

A low housing supply creates intense competition among buyers, particularly in popular regions or cities where demand outpaces supply. Multiple offers and bidding wars become common occurrences, which can drive up prices even higher than what would be expected based solely on market fundamentals.

For real estate investors, finding investment properties becomes more challenging with limited inventory. Traditional investors need to adopt alternative strategies, such as identifying off-market deals or exploring distressed properties that require renovation or rehabilitation. Additionally, investors should consider diversifying their portfolios by targeting markets with less competition and more favorable market dynamics.

The overall lack of inventory leaves people and investors hurting unless they know creative strategies for sourcing homes, negotiating desirable terms with sellers and purchasing wanted properties without relying on a bank loan.

A house with a price tag that says "you don't own this :("
SubTo can help you own a home, not just rent.

Regional Differences

The housing market is diverse when it comes to the different regions.

While some areas of the country may experience price drops in 2023 due to oversupply or changing economics, others may remain more stable or experience continued appreciation due to strong demand.

Moving into the second half of this year, it’s important that you local market conditions carefully.

Tracking indicators such as job growth rates, unemployment levels, population trends, and industry developments can give you insights into the stability and potential future performance of potential areas where the housing market will have opportunities.

By understanding these regional differences and knowing what’s happening in these local housing markets, people can make informed decisions when buying a house in 2023.

Remember to assess not only the current state of a particular region's housing market, but also its long-term growth potential.

2023 Market Recap

Owning a home is not like it used to be.

Home prices have only historically gone up. Interest rates change all the time. The cost of living is higher than ever.

While a lot of people want to own homes, the truth is that the usual and traditional way of getting ownership of property just doesn’t work for most people.

Buying a house in 2023 will require careful monitoring of the housing market. Prospective homeowners and real estate investors need to be aware of the challenges they face, including increased mortgage rates, cost affordability concerns, limited inventory, and regional differences.

Higher mortgage rates can limit home affordability for buyers and impact real estate investors' returns and cash flow. Rising home prices create affordability concerns for first-time homebuyers while presenting opportunities for real estate investors in the rental market.

Ultimately, staying informed about housing supply and market conditions is critical when making real estate decisions in 2023.

Whether you are a prospective homeowner or a real estate investor, understanding these challenges can help you get through the roller coaster that’s called the real estate market. If you understand the housing market and can make it work for you, you can make decisions that can help you build a stable financial future like you’ve not experienced before.

And if you’re looking for a quick way to gain a better understanding and to make your own first investment either into your own private property or into an investment property, you can learn how to do it in any market by joining the SubTo community.


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